Labopharm Inc. and Purdue Pharma L.P. have entered into a definitive licensing and distribution agreement under which Labopharm, through its subsidiary, Labopharm Europe Limited, has granted Purdue Pharma Products L.P. the exclusive right to market, sell and distribute Labopharm's once-daily formulation of the analgesic tramadol in the United States, its territories and possessions. Labopharm will retain co-promotion rights for certain medical specialties.

Under the terms of the agreement, Labopharm will receive payments of up to US$170 million, including an up-front licensing fee of US$20 million, a payment of up to US$40 million upon regulatory approval of Labopharm's product by the US FDA, and payments upon the product meeting specified sales targets. Labopharm will receive royalty rates ranging from 20 to 25% of product sales. In addition, the costs of hiring, training and compensating Labopharm's sales force will be borne by Purdue.

James R. Howard-Tripp, President and CEO, Labopharm Inc states, "We are pleased not only with the terms of the agreement, which include a royalty rate commensurate with our expectations, but also with the collaborative nature of our marketing partnership. As examples, our companies will form a joint marketing team to prepare for the launch of our product. Following launch, Purdue will assist us in achieving one of our key strategic goals by building and training Labopharm's own sales force to allow us to pursue certain specialty markets in the US."

"As the premier US marketer of long-acting pain medications, including OxyContin (oxycodone HCl controlled-release) Tablets and MS Contin (morphine sulfate controlled-release) Tablets, and with its extensive patent portfolio related to controlled-release tramadol, Purdue is the ideal partner for our product in the United States," said Dr. Allan Mandelzys, Vice President, Business Development, Labopharm Inc.

The agreement is subject to Hart-Scott-Rodino clearance in the United States.

Tramadol is a centrally acting analgesic that is indicated for the treatment of moderate to moderately severe pain in adults. The worldwide market for tramadol is estimated to be valued at US$1.3 billion and IMS Health estimates that the worldwide sales volume of tramadol has grown at a compounded annual rate of 14% over the past five years.