Advancis Pharmaceutical ( AVNC) continues to move into the anti-infectives space, announcing that it bought the U.S. rights to Keflex, an antibiotic used to treat skin infections, from Eli Lilly ( LLY) for $11 million.

Under the agreement, Advancis will get the exclusive rights to manufacture, market and sell the drug, which is sold generically as cephalexin, and can also submit new drug applications for Keflex. But while cephalexin is the third-most prescribed outpatient antibiotic in the U.S., with sales of $140 million last year, the brand-name Keflex had sales of just $3 million in 2003.

In reaction, shares of Advancis, which have not performed well since hitting the market at $10 on Oct. 17, rose 35 cents, or 5.2%, to $7.08. Shares of Lilly fell 6 cents, or 0.1%, to $69.85.

Advancis will begin recognizing revenue from Keflex effective immediately, but the real draw for the company is the ability to use its pulsatile dosing technology called Pulsys to develop a once-daily version of Keflex. Currently, cephalexin is taken two to four times a day for up to two weeks to eliminate infections.

The company now has Pulsys versions of three of the five most-prescribed antibiotics in the U.S. A month ago, Advancis announced a partnership with Par Pharmaceutical ( PRX) to create a Pulsys version of amoxicillin, after previously announcing a partnership with GlaxoSmithKline ( GSK) to make Pulsys version of amoxicillin/clavulanate.

"The acquisition of Keflex is an illustration of our ongoing mission to develop and acquire antibiotic products that we believe can be improved through our novel pulsatile approach," said Edward Rudnic, chairman, president, and CEO of Advancis. "In addition, we believe the acquisition and subsequent sales of Keflex will enable us to prepare for the eventual commercialization of Pulsys products, including our recently announced lead product under development, Amoxicillin Pulsys."

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