Cipher Pharmaceuticals Inc has entered into a definitive development, distribution and supply agreement with Ranbaxy Pharmaceuticals Inc (RPI), a wholly-owned subsidiary of Ranbaxy Laboratories Limited, under which Cipher has granted RPI the exclusive right to market, sell and distribute CIP-Isotretinoin in the United States, its territories and possessions.

CIP-Isotretinoin is a novel, patented formulation of isotretinoin, which is used in the treatment of severe nodular acne. The product received approvable letters from the US Food and Drug Administration (FDA) in May 2006 and April 2007 in which the FDA requested that Cipher provide additional clinical safety data. Cipher and its advisors are currently in discussions with the FDA's Division of Dermatology and Dental Products regarding the appropriate design of a safety study.

Under the terms of the agreement with RPI, Cipher received an initial upfront milestone payment of US$ 1 million. The agreement includes additional pre- and post-commercialization milestone payments of up to US$ 23 million, contingent upon the achievement of certain milestone targets. Once the product is successfully commercialized, Cipher will also receive a royalty in the mid-teens on net sales. In addition, RPI will reimburse Cipher for all costs associated with the clinical studies required to obtain FDA approval, up to a predetermined cap. Any additional development costs associated with initial FDA approval will be shared equally.

Cipher is responsible for all product development activities, including management of the clinical studies required by the FDA to secure NDA approval. Cipher is also responsible for product supply and manufacturing, which would be fulfilled by its partner, Galephar Pharmaceutical Research. After product-related expenses are deducted, approximately 50 per cent of all milestone and royalty payments received by Cipher under the agreement will be paid to Galephar.

Ranbaxy has a well-established, leading presence in the US isotretinoin market through the Sotret brand, and their sales, marketing and Ipledge risk management expertise make them an ideal partner for CIP-Isotretinoin," said Larry Andrews, president and chief executive officer of Cipher Pharmaceuticals. "This agreement provides us with the financial resources to complete CIP-Isotretinoin's clinical development program while also achieving attractive commercialization terms post-FDA approval."

Ashish Anvekar, director sales and marketing for Ranbaxy, said, "We are pleased to add a promising late-stage product to our portfolio as we build our branded dermatology pharmaceutical business. We believe this product's unique attributes, particularly the more consistent absorption profile, would provide a significant advancement in the treatment of severe, nodular acne. With US sales of $ 314 million for the 12 months ending June 2008, there is continued strong demand for the molecule, and we see a substantial market opportunity for this innovative formulation."

Ranbaxy currently markets a version of isotretinoin under the brand name Sotret. As of May 31, 2008, Sotret prescriptions exceeded 50 per cent of the total US market for isotretinoin.

Ranbaxy Pharmaceuticals (RPI) based in Jacksonville, Florida, is a wholly-owned subsidiary of Ranbaxy Laboratories Limited, India's largest pharmaceutical company. RPI is engaged in the sale and distribution of generic and branded prescription products in the US healthcare system.

Cipher Pharmaceuticals is a drug development company focused on commercializing novel formulations of successful, currently marketed molecules using advanced drug delivery technologies. Cipher's strategy is to in-license products that incorporate proven drug delivery technologies and advance them through the clinical development and regulatory approval stages, after which the products are out-licensed to international partners.