Alkermes, Cephalon Sign Pact - TheStreet





(ALKS) - Get Report

reached an agreement to develop and commercialize Vivitrex, an investigational drug in development by Alkermes for treating alcohol dependence.

Under the terms of the agreement, Cephalon will make an initial payment of $160 million to Alkermes and an additional $110 million payment if Vivitrex is approved by the Food and Drug Administration. Alkermes could receive up to an additional $220 million in milestone payments depending on sales of Vivitrex.

The companies will share responsibility for developing the commercial strategy for Vivitrex. Cephalon will have primary responsibility for marketing and sales, and Alkermes will provide a team of treatment system specialists. Alkermes also will be responsible for obtaining marketing approval for Vivitrex and for manufacturing the product.

Cephalon will record net sales from Vivitrex in the U.S. Alkermes is responsible for any cumulative losses up to $120 million until the later of Dec. 31, 2007, or 18 months after FDA approval. During that time period, cumulative losses above $120 million will be attributed to Cephalon. Afterward, any pretax profits or losses will be shared equally by the companies.

Alkermes submitted a new drug application for Vivitrex to the FDA on March 31. The application has been granted priority review. Shares of Alkermes were up 51 cents, or 4%, to $13.61, and Cephalon was gaining 6 cents to $38.50.