Labopharm, Paladin Labs expand commercial relationship

Oct 14 2010

- Companies Establish Licensing and Distribution Agreements for Labopharm's INTELLITAB(TM)-Based Oxycodone-Acetaminophen and Twice-Daily Tramadol Acetaminophen -

Labopharm Inc. (TSX: DDS; NASDAQ: DDSS) and Paladin Labs Inc. (TSX:PLB) today announced they have expanded their commercial relationship through three licensing and distribution agreements under which Paladin will distribute two of Labopharm's products in certain jurisdictions.

"Paladin has played a key role in the success of TRIDURAL(TM), our once-daily tramadol product in Canada, and we are pleased to expand our commercial relationship with licensing and distribution agreements for two additional products, including the first such agreement for a product based on our INTELLITAB(TM) technology platform for the development of misuse-deterrent and tamper-resistant formulations of existing medications," said James R. Howard-Tripp, President and Chief Executive Officer, Labopharm Inc.

"The commercial success of TRIDURAL(TM), which holds the number one market position in the extended release tramadol market in Canada, has elevated the strategic importance of pain as a therapeutic focus area for Paladin," said Jonathan Ross Goodman, President and Chief Executive Officer, Paladin Labs Inc. "We are pleased to broaden and strengthen our collaboration with an existing commercial partner across multiple geographies and products in order to augment our pain portfolio. The agreement marks the first multi-territorial license agreement since our Pharmaplan investment in South Africa. This is significant because it signals our ability to leverage Paladin's existing commercial relationships to the benefit of our South African operation."

In the first agreement, Labopharm has granted Paladin the exclusive right (subject to Labopharm's co-promote right for Canada) to market and sell its INTELLITAB(TM)-based twice-daily formulation of oxycodone-acetaminophen in Canada. The two companies will collaborate on a development plan for the product, which would see Paladin share equally in funding development costs related specifically to meeting Canadian regulatory approval requirements under a finalized plan. In addition, Paladin has a right of first opportunity on a second INTELLITAB-based pain product for Canada.

According to IMS Canada, the combination oxycodone-acetaminophen market in Canada is valued at over $32 million annually.

In the second and third agreements, Labopharm has granted Paladin the exclusive right to market and sell its INTELLITAB(TM)-based oxycodone-acetaminophen and twice-daily tramadol-acetaminophen in certain countries in Sub-Saharan Africa. Paladin will be responsible for all development and regulatory costs in this region for both products.

Under the terms of all three agreements Labopharm will receive a transfer price on product supply based on a percentage of the anticipated selling price. In addition, Labopharm is eligible to receive up to a combined total of $7.2 million between the three agreements related to the achievement of certain regulatory approval and sales milestones.

As part of the agreements, Paladin will advance Labopharm $10 million against future product supply of TRIDURAL(TM) (once-daily tramadol in Canada) to Paladin for distribution in Canada. Labopharm will repay the cash advance through partial credits against future product supplied to Paladin. The cash advance will bear interest at a rate of 16% per annum and matures on May 1, 2012.