Depomed is celebrating after getting the thumbs-up from regulators in the USA for its shingles drug Gralise but now needs to resolve a dispute with its seemingly-reluctant marketing partner Abbott Laboratories.
The Food and Drug Administration has approved Gralise (extended-release gabapentin) tablets for once-daily treatment of post-herpetic neuralgia, which is pain following healing of the rash associated with shingles. PHN afflicts one in five patients diagnosed with shingles in the USA, especially the elderly and 70,000-100,000 Americans are affected by each year.
The approval of Gralise triggers a milestone payment of $48 million from Abbott to Depomed, whose chief executive, Carl Pelzel, said that the green light "is a major step toward achieving our key strategic objective of sustainable profitability in 2011 and beyond". He then went on to thank "everyone on the Depomed and Abbott teams involved in the development and approval of this important therapy".
However it appears that Abbott is not too keen on getting involved in actually selling Gralise. It was licensed to Solvay Pharmaceuticals in November 2008, which was then acquired by the US major in February 10. The original deal, in addition to the $48 million for approval, called for royalties of 14%-20% on product sales, and milestone payments of up to $300 million.
A fortnight ago, however, things got complicated when Abbott declared it "does not believe it is obligated to launch and commercialise" Gralise. Depomed believes the license agreement imposes on Abbott obligations to make the first commercial sale of the drug within a specified period of time following FDA approval, "perform a minimum number of sales calls annually" and "make specified minimum promotional expenditures".
Mr Pelzel said "we are perplexed by Abbott's reluctance to adhere to their contract obligations given the in-depth market research previously undertaken regarding this product". He added that "we are disappointed that the product does not appear to fit into the Abbott commercial portfolio and that they have chosen to contest what we believe are clear and unambiguous contractual terms".
Nevertheless, Depomed added that "we are very willing to work collaboratively with Abbott to resolve this matter quickly, fairly and equitably" and the parties are now planning to initiate "good faith mediation to resolve the dispute". If not resolved, the agreement provides that the parties submit to binding arbitration and in that event, Depomed believes it would be entitled to seek damages that would include lost royalties and milestone revenues.