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Pharma Watch: Labopharm, Angelini Plan U.S. Joint Venture

April 30, 2010 (FinancialWire) — Labopharm Inc. (TSX: DDS) (NASDAQ: DDSS) and Gruppo Angelini said they have entered into an agreement to establish a joint venture in the United States for the commercialization of Oleptro, a novel once-daily formulation of the antidepressant trazodone approved by the U.S. Food and Drug Administration on February 3, 2010.

The joint venture, Angelini Labopharm, will be 50 percent owned by each of Labopharm and Angelini and will be initially managed by Mary Anne Heino, president of Labopharm's U.S. operations, and her team.

In consideration of granting Angelini Labopharm the exclusive license to market and sell Oleptro in the United States, Labopharm will receive up to $92 million, $52 million of which will be paid upon completion of the transaction $26 million in cash and $26 million as Labopharm's 50 percent ownership interest in Angelini Labopharm).

Labopharm is eligible to receive the remaining US$40 million upon Oleptro achieving certain sales milestones (or US$20 million after giving effect to Labopharm's 50 percent participation in the joint venture).

In addition, upon completion of the transaction, Angelini Labopharm will reimburse Labopharm for the costs that Labopharm has paid year to date in 2010 related to the U.S. launch of Oleptro.

Labopharm and Angelini will each initially contribute $14 million to Angelini Labopharm to fund a total of $28 million in initial working capital to support the continued preparation for and launch of Oleptro.

As a result of the joint venture agreement, a 2007 cross-licensing agreement between Labopharm and Angelini will be amended such that the royalty on end user U.S. net sales to be paid by Labopharm to Angelini is 1.5 percent on end user net sales in excess of $50 million. The transaction is scheduled to be completed by the end of May 2010 and is subject to conditions customary to such transactions.

Italy-based Angelini is a privately-owned healthcare firm in the pharmaceutical and mass market sectors. In the pharmaceutical sector, Angelini focuses mainly on pain relief, inflammation, CNS, pediatrics, cold and flu, oral care and sore throat, gynecology and disinfection.

Canada-based Labopharm is focused on optimizing the performance of existing small molecule drugs using its proprietary controlled-release technologies. The company's lead product, a once-daily formulation of tramadol, is now available in 19 countries around the world, including the U.S., Canada, various European markets, South Korea and Australia. Its second product, Oleptro, a novel formulation of trazodone for the treatment of major depressive disorder in adults, has received regulatory approval in the U.S. and is under regulatory review in Canada.

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