Transcept could make an additional $120 million in milestones.

Purdue Pharmaceutical Products is paying $25 million up front to Transcept Pharmaceuticals for U.S. marketing rights to a sleep-aid medication that is currently under FDA review. If approved, Intermezzo® could be the first prescription drug sanctioned for use in the middle of the night when a person has difficulty returning to sleep. October 30 is the PDUFA action date for the NDA.

Under the exclusive license and collaboration agreement, Transcept stands to earn $30 million based on the timing of an FDA approval and an additional $90 million upon reaching milestones related to achievement of intellectual property and U.S. net sales targets.

Transcept has granted Purdue and a Purdue-associated company exclusive rights to sell and distribute Intermezzo in the U.S. and the right to negotiate for the commercialization of the product in Canada and Mexico. Transcept has retained an option to co-promote to psychiatrists in the U.S.

Purdue will pay double-digit royalties to Transcept going up to the mid-20% level on net U.S. sales. If Transcept exercises its co-promotion option, it will receive an additional double-digit royalty on the portion of U.S. net sales generated by psychiatrists. Transcept can enter the market under the co-promotion option as early as the first anniversary of the commercial launch of Intermezzo by Purdue.

“Purdue has an established and growing primary care marketing and sales capability that we believe is ideally positioned to introduce Intermezzo to physicians,” notes Glenn A. Oclassen, president and CEO of Transcept. “Purdue has a demonstrated track record in the key disciplines needed to drive the awareness and acceptance of Intermezzo, including successful experience marketing to national distributors, managed care organizations, and primary care physicians.”

Intermezzo is a sublingual low dose formulation of zolpidem, the active agent commonly prescribed in the U.S. for insomnia. Transcept believes that Intermezzo, by combining the reduced zolpidem dose with administration only on those nights when a middle of the night awakening actually occurs, has the potential to reduce unnecessary sedative-hypnotic exposure.

Two Phase III studies evaluated 376 patients receiving either Intermezzo or placebo. In the first study, a sleep laboratory trial using an objective polysomnographic endpoint, Intermezzo reportedly demonstrated a statistically significant decrease versus placebo in the time it took patients to return to sleep. In the second study, an out-patient trial, the drug showed a statistically significant decrease in latency to sleep onset, a subjective patient-reported endpoint.

Transcept is pursuing patents to protect Intermezzo in the U.S. and key non-U.S. markets. As part of the NDA submission, it has requested that the FDA grant three years of Hatch-Waxman marketing exclusivity.

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