Depomed, Inc. and Esprit Pharma, Inc. have entered into a license agreement for Proquin XR, Depomed's recently approved extended release formulation of ciprofloxacin hydrochloride for the treatment of uncomplicated urinary tract infections.

Under the agreement, Esprit is expected to launch Proquin XR in the US urology market in the fourth quarter 2005, followed by a subsequent launch into other attractive physician markets within six months of the urology market launch. Depomed retains manufacturing rights and Esprit will be responsible for sales, marketing and distribution. In addition to the license fee and agreed upon royalty rates, the agreement also provides for minimum royalties to be paid to Depomed annually, as well as minimum sales force size and marketing efforts utilized by Esprit.

In return for exclusive rights to market and distribute Proquin XR in the United States and Puerto Rico, Esprit will pay Depomed a $50 million license fee, consisting of $30 million payable upfront, $10 million in 12 months and the remaining $10 million due in 24 months. Also under the agreement, Esprit will pay Depomed 15 per cent to 25 per cent royalties on net sales of Proquin XR, based on escalating product sales. Additionally, Esprit also has right of first refusal for the sales and marketing of Proquin XR for the Canadian market, according to the company release.

John Spitznagel, chairman and chief executive officer of Esprit commented, "Adding Proquin XR to our product portfolio provides an outstanding opportunity to leverage the strength of Esprit's sales force and to realize benefits arising from product synergies with our marketing of Sanctura, a treatment for overactive bladder."

UTIs are bacterial infections frequently caused by E. coli and are typically treated with antibiotics.