Columbia Laboratories' sale of progesterone related assets to Watson receives stockholder approval

Jul 2 2010

Columbia Laboratories, Inc. (Nasdaq: CBRX) announced that in a special meeting of stockholders held this morning, stockholders approved the sale of substantially all of Columbia's progesterone related assets to Watson Pharmaceuticals, Inc. (NYSE: WPI) (the "Watson Transaction"). Stockholders also voted to increase the number of authorized shares of Columbia's common stock, $0.01 par value per share, from 100,000,000 to 150,000,000 (the "Charter Amendment").

“We look forward to closing this transaction in the next few days, and using some of the initial proceeds to immediately retire our debt. This is the first step in Columbia's transformation to a focused development company, debt-free, with a clearer path to profitability.”

"We are pleased that our stockholders have approved the sale of our progesterone assets to Watson and the share increase necessary to complete that transaction," said Frank C. Condella, Jr., Columbia's president and chief executive officer. "We look forward to closing this transaction in the next few days, and using some of the initial proceeds to immediately retire our debt. This is the first step in Columbia's transformation to a focused development company, debt-free, with a clearer path to profitability."

As previously announced, on March 3, 2010, Columbia entered into a definitive agreement to sell substantially all of its progesterone related assets, including its preterm birth patent applications, and 11.2 million shares of newly-issued common stock to Watson. Columbia will receive $47 million upfront from Watson, and Watson will forgive all principal and accrued interest on the $15 million subordinated term loan dated June 1, 2010. Columbia will also receive royalties of 10 to 20 percent of annual net sales of certain progesterone products, and is eligible for an additional amount of up to $45.5 million based on success milestones in the potential preterm birth indication. Watson will fund the development of a second-generation vaginal progesterone product as part of a comprehensive life-cycle management strategy.

Columbia will retain certain assets and rights to its progesterone business, including all rights necessary to perform its obligations under its agreement with Merck Serono S.A. Merck Serono holds marketing rights to and makes payments to Columbia related to CRINONE^® (progesterone gel) sales in all countries outside the United States.

The Watson Transaction is expected to close within three business days.