CHADDS FORD, Pa. and DANBURY, Conn., Jan. 8 /PRNewswire-FirstCall/ -- Endo Pharmaceuticals Holdings Inc. and Penwest Pharmaceuticals Co. today announced an amendment to the contract governing the companies’ collaboration for Opana(R) ER (oxymorphone HCl) extended-release tablets CII. The contract between Endo and Penwest was originally signed in 1997, and was amended and restated in April 2002.
Endo and Penwest have agreed to restructure their current agreement to provide that royalties payable to Penwest for U.S. sales of Opana ER will be calculated based on net sales of the product rather than on operating profit, and to change certain other provisions of the agreement. This amendment also resolves the parties’ ongoing disagreement with regard to sharing of marketing expenses during the period prior to when the product reaches profitability.
The key financial terms of the amendment to the contract are summarized as follows:
* With respect to U.S. sales of Opana ER, Endo’s royalty payments to Penwest will be calculated starting at 22% of annual net sales of the product, and, based on agreed-upon levels of net sales achieved, the royalty rate can increase to a maximum of 30%. * No royalty payments will be due to Penwest for the first $41 million of royalties that would otherwise have been payable beginning from the time of the product launch in July 2006. * Penwest is entitled to receive milestone payments of up to $90 million based upon the achievement of certain agreed-upon annual sales thresholds. * In April 2003, Penwest opted out of funding development costs for Opana ER. Under the agreement between the parties, Endo was entitled to recoup Penwest’s share of these development costs through a temporary adjustment in royalties. Under the amendment, the parties have agreed that Penwest’s share of these unfunded development costs will be fixed at $28 million and will be recouped by Endo through a temporary 50% reduction in royalties. This temporary reduction in royalties will not apply until the threshold for the royalty holiday referred to above has been met.
“Endo is pleased that both parties have achieved a fair and equitable conclusion to this matter, and we look forward to a long and profitable partnership with Penwest,” said Endo President and Chief Executive Officer Peter A. Lankau. “This settlement provides for a more straightforward and conventional royalty arrangement and allows Endo to now direct the U.S. commercialization efforts, which will increase our ability to enhance the value of this asset for Endo, while ensuring that Opana ER reaches its full potential in the market for long-acting opioid analgesics.”
Jennifer L. Good, President and Chief Executive Officer of Penwest, said, “We are pleased to have reached an agreement with Endo that resolves our outstanding issues and provides greater clarity for our shareholders going forward. We believe this agreement preserves the economic value of Opana ER to Penwest and simplifies the determination of our royalty. We continue to believe that Opana ER will be a valuable financial asset for Penwest as we focus on growing our business by developing our own products targeted at disorders of the nervous system.”
Penwest and Endo reached this new agreement during the mediation phase of the dispute resolution process under the contract. The agreement announced today completes this process.
Opana ER was approved by the U.S. Food and Drug Administration on June 22, 2006 for the relief of moderate-to-severe pain in patients requiring continuous, around-the-clock opioid treatment for an extended period of time and is not intended to be used on an as-needed basis. Endo launched Opana ER in July 2006 and has full responsibility for U.S. marketing and sales of the product.
Endo Conference Call and Webcast
Endo will conduct a conference call with financial analysts to discuss this news release as well as its 2007 financial guidance at 5:00 p.m. EST today. Investors and other interested parties may access the conference call by dialing (866) 383-8108 (domestic/Canada) or (617) 597-5343 (international). Please dial in 10 minutes prior to the scheduled start time, and reference passcode 97442356.
A replay of the call will be available from January 8, 2007 at 7:00 p.m. EST by dialing (888) 286-8010 (domestic/Canada) or (617) 801-6888 (international), passcode 92830214, and will run until 12:00 a.m. EST on January 15, 2007.
A simultaneous webcast of the call for interested investors and others may be accessed by visiting www.endo.com. In addition, a replay of the webcast will be available until 12:00 a.m. EST on January 15, 2007. The replay can be accessed by clicking on “Events” in the Investor Relations section of the web site.
Penwest Conference Call and Webcast
Ms. Good and Benjamin Palleiko, Senior Vice President, Corporate Development and Chief Financial Officer, will hold a conference call today at 9:00 am EST to discuss Penwest’s new agreement with Endo. Investors and other interested parties may access the conference call by dialing (877) 809-3716 (USA and Canada) or (706) 634-9511 (International). The conference ID is 5887039. The conference call will also be accessible as a replay on the Investor Relations section of the Penwest web site at http://www.penwest.com.
About Endo
Endo Pharmaceuticals Holdings Inc. is a fully integrated specialty pharmaceutical company with market leadership in pain management products. Through its Endo Pharmaceuticals Inc. subsidiary, the company researches, develops, produces and markets a broad product offering of both branded and generic pharmaceuticals, meeting the needs of healthcare professionals and consumers alike. More information, including this and past press releases of Endo Pharmaceuticals Holdings Inc., is available online at http://www.endo.com.
About Penwest
Penwest is a specialty pharmaceutical company dedicated to bringing to the marketplace innovative products that help improve the lives of patients. The Company’s goal is to identify, develop and commercialize prescription products that address unmet medical needs, primarily for diseases of the nervous system. At the core of this strategy, Penwest applies drug delivery technologies, including its own proprietary technologies, to new and existing compounds to enhance their therapeutic profiles. The launch by Endo Pharmaceuticals of Opana(R) ER (oxymorphone hydrochloride extended-release tablets) in mid-2006 demonstrates the execution of this strategy and the value of Penwest’s TIMERx(R) extended release delivery technology. Penwest is currently applying its expertise to a pipeline of potential products that are in various stages of development. The Company intends to commercialize these products independently and through third party alliances.
Endo Forward-Looking Statement
This press release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on management’s beliefs and assumptions, current expectations, estimates and projections. Statements that are not historical facts, including statements which are preceded by, followed by, or that include, the words “believes,” “anticipates,” “plans,” “expects” or similar expressions and statements are forward-looking statements. Endo’s estimated or anticipated future results, product performance or other non- historical facts are forward-looking and reflect Endo’s current perspective on existing trends and information. Many of the factors that will determine the Company’s future results are beyond the ability of the Company to control or predict. These statements are subject to risks and uncertainties and, therefore, actual results may differ materially from those expressed or implied by these forward-looking statements. The reader should not rely on any forward-looking statement. The Company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. Several important factors, in addition to the specific factors discussed in connection with these forward-looking statements individually, could affect the future results of Endo and could cause those results to differ materially from those expressed in the forward-looking statements contained in this press release. Important factors that may affect future results include, but are not limited to: market acceptance of the Company’s products and the impact of competitive products and pricing; dependence on sole source suppliers; the success of the Company’s product development activities and the timeliness with which regulatory authorizations and product launches may be achieved; successful compliance with extensive, costly, complex and evolving governmental regulations and restrictions; the availability on commercially reasonable terms of raw materials and other third party manufactured products; exposure to product liability and other lawsuits and contingencies; dependence on third party suppliers, distributors and collaboration partners; the ability to timely and cost effectively integrate acquisitions; uncertainty associated with pre- clinical studies and clinical trials and regulatory approval; uncertainty of market acceptance of new products; the difficulty of predicting FDA approvals; risks with respect to technology and product development; the effect of competing products and prices; uncertainties regarding intellectual property protection; uncertainties as to the outcome of litigation; changes in operating results; impact of competitive products and pricing; product development; changes in laws and regulations; customer demand; possible future litigation; availability of future financing and reimbursement policies of government and private health insurers and others; and other risks and uncertainties detailed in Endo’s filings with the Securities and Exchange Commission, including its Registration Statement on Form S-3 filed with the SEC on March 21, 2006. Readers should evaluate any statement in light of these important factors.
Penwest Forward-Looking Statement
The matters discussed herein contain forward-looking statements that involve risks and uncertainties, which may cause Penwest’s actual results in future periods to be materially different from any future performance suggested herein. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words, “believes,” “anticipates,” “plans,” “expects,” “intends,” “potential,” and similar expressions are intended to identify forward-looking statements. Important factors that could cause results to differ materially include: risks relating to the commercial success of Opana ER, including; the risk that Opana ER will not be accepted by the medical community; dependence on collaborators such as Endo to, among other things, sell products for which Penwest receives royalties; regulatory risks relating to drugs in development such as torsemide ER and nalbuphine ER, including the timing and outcome of regulatory action; uncertainty of success of collaborations; the timing of clinical trials and whether the results of clinical trials will warrant further clinical trials or warrant submission of an application for regulatory approval of, or the regulatory approval of, the product that is the subject of the trial; actual and potential competition; the need for capital; and other risks as set forth under the caption Risk Factors in Penwest’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2006, which risk factors are incorporated herein by reference. Penwest disclaims any intention or obligation to update any forward-looking statements.
Contacts: For Endo For Penwest Bill Newbould Investors: (610) 558-9800 Ben Palleiko Penwest (203) 796-3750/(877) 736-9378 Media: Caroline Gentile/Laura Walters Kekst and Company (212) 521-4800
Penwest Pharmaceuticals Co.
CONTACT: Bill Newbould, Endo Pharmaceuticals Holdings Inc.,+1-610-558-9800; Ben Palleiko, Investors for Penwest Pharmaceuticals Co.,+1-203-796-3750, or +1-887-736-9378; Caroline Gentile, or Laura Walters,Media for Penwest Pharmaceuticals Co., +1-212-521-4800
