Depomed Will Engage In Mediation To Resolve Dispute With Abbott; Comments On DM-1796 Regulatory Status And Orphan Drug Designation

MENLO PARK, Calif., Jan. 18, 2011 (GLOBE NEWSWIRE) -- Depomed, Inc. (Nasdaq:DEPO) today announced that it will engage in a mediation process with Abbott Products, Inc., regarding Abbott's commercialization obligations related to DM-1796, an investigational, once-daily formulation of gabapentin for the management of post-herpetic neuralgia (PHN). DM-1796 was developed by Depomed and is licensed to Abbott Products in the U.S., Canada and Mexico for the treatment of pain.

Carl Pelzel, Depomed's President and CEO, said, "We believe DM-1796 meets an important need for sufferers of PHN, as evidenced by the FDA's decision to grant DM-1796 Orphan Drug status on the basis of its side effect profile. We at Depomed want to ensure that this important therapy is available to patients as soon as possible following FDA approval, which could occur on the upcoming January 30 PDUFA date. Should that occur, the product's full commercial profile can be introduced to the marketplace. DM-1796 fills a very significant unmet market need and we hope to see it effectively marketed."

The Parties' Dispute

Abbott Laboratories (NYSE:ABT), the parent company of Abbott Products, recently informed Depomed that it does not believe it is obligated to launch and commercialize DM-1796.

Depomed believes the license agreement clearly and unambiguously imposes on Abbott the following obligations with regard to the launch and commercialization of DM-1796: (i) to make the first commercial sale of DM-1796 to occur within a specified period of time following FDA approval; (ii) to perform a minimum number of sales calls annually; (iii) to make specified minimum promotional expenditures; and (iv) to use commercially reasonable efforts to commercialize DM-1796 in the United States following approval of the DM-1796 NDA. Abbott's launch and commercialization obligations through the second anniversary of the product launch are defined by specific dollar values in the license agreement based on a minimum number of annual sales calls and minimum annual promotional expenditures. The dollar value specified totals approximately $85 million to $135 million, depending on the ultimate product labeling.