Purdue Pharmaceutical Products L.P. and Transcept Pharmaceuticals, Inc. announced entry into an exclusive license and collaboration agreement to commercialize Intermezzo (zolpidem tartrate sublingual tablet) in the United States. If approved by the US Food and Drug Administration (FDA), Intermezzo has the potential to be the first prescription sleep aid specifically approved for use in the middle of the night at the time a patient awakens and has difficulty returning to sleep. The FDA has established October 30, 2009 as the Prescription Drug User Fee Act (PDUFA) action date for the Intermezzo New Drug Application (NDA).

In the agreement announced, Transcept has granted Purdue and a Purdue associated company an exclusive license to market, sell and distribute Intermezzo in the United States and the right to negotiate for the commercialization of the product in Canada and Mexico. Transcept has retained an option to co-promote Intermezzoto psychiatrists in the United States and has retained rights to commercialize Intermezzo in the rest of the world.

Under the terms of the agreement, Purdue will pay Transcept near-term milestones that include an upfront cash payment of $25 million and an additional payment of up to $30 million based upon the timing of an FDA approval of Intermezzo, which approval and payment are subject to review and acceptance by Purdue. Transcept is eligible to receive up to an additional $90 million upon reaching future milestones related to achievement of intellectual property and US net sales targets.

Purdue will pay double-digit royalties to Transcept ranging up to the mid-twenty percent level on US net sales of Intermezzo. If Transcept elects to exercise its psychiatrist co-promotion option, Transcept will receive an additional double-digit royalty on the portion of US net sales generated by psychiatrists. Under the agreement, Transcept can enter the market under the co-promotion option as early as the first anniversary of the commercial launch of Intermezzo by Purdue.

Glenn A. Oclassen, president and chief executive officer of Transcept, said, "This agreement is a transforming event for Transcept. Purdue has an established and growing primary care marketing and sales capability that we believe is ideally positioned to introduce Intermezzo to physicians. Purdue has a demonstrated track-record in the key disciplines needed to drive the awareness and acceptance of Intermezzo, including successful experience marketing to national distributors, managed care organizations and primary care physicians. We believe that Intermezzo has the potential to occupy an important position in the substantial worldwide market for prescription sleep aids, and that our US partnership with Purdue is a key step toward the commercial success of Intermezzo."

Oclassen continued, "This agreement further increases our substantial cash reserves and aligns us with a powerful partner that will make a significant US primary care sales and marketing investment. Our agreement with Purdue establishes the potential for a substantial Transcept revenue stream, and now enables us to focus increasing attention on prospective Intermezzo commercialization partners in other parts of the world. The increased resources Transcept receives from this collaboration will also support our continued product pipeline expansion efforts. Finally, our option to co-promote Intermezzo in the United States provides a foundation for achieving our long-term goal of becoming a fully integrated specialty pharmaceutical company and creating even greater value for our shareholders."

Purdue's president and chief executive officer, John H. Stewart commented, "We are excited to be working with Transcept towards the launch of this potential new entry into the prescription sleep aid market. This agreement is part of Purdue's plan to diversify our product portfolio and broaden our commercial focus into therapeutic areas that complement our leadership position in pain management." Stewart added, "We are confident that prescribers will find Intermezzo to be a valuable therapeutic option for managing patients with middle-of-the-night sleep disorders that fall within the proposed indication for the product's use."

Intermezzo (zolpidem tartrate sublingual tablet) has the potential to be the first prescription sleep aid specifically approved for use in the middle of the night at the time a patient awakens and has difficulty returning to sleep. Intermezzo is a sublingual low dose formulation of zolpidem, the active agent most commonly prescribed in the United States for the treatment of insomnia. Intermezzo uses approximately one-quarter to one-third of the dose of active drug contained in currently marketed zolpidem-based sleep aids, in a formulation designed to promote rapid sublingual absorption. Transcept believes that Intermezzo, by combining the reduced zolpidem dose with administration only on those nights when a middle of the night awakening actually occurs, has the potential to reduce unnecessary sedative-hypnotic exposure.

Two phase 3 clinical studies evaluated 376 patients receiving either Intermezzo or placebo. In the first study, a sleep laboratory trial using an objective polysomnographic endpoint, Intermezzo demonstrated a statistically significant decrease versus placebo in the time it took patients to return to sleep as measured by Latency to Persistent Sleep. In the second study, an outpatient trial, Intermezzo demonstrated a statistically significant decrease in Latency to Sleep Onset, a subjective patient reported endpoint. The most common adverse event seen in these trials was headache (2.7 per cent active versus 1.4 per cent placebo in the outpatient study).

The FDA has established October 30, 2009 as its target date under PDUFA to take action on its review of the NDA. Transcept is actively pursuing patents to protect Intermezzo in the United States and key non-US markets, and, as part of the NDA submission, has requested that the FDA grant three years of Hatch-Waxman marketing exclusivity to Intermezzo.

Transcept Pharmaceuticals, Inc. is a specialty pharmaceutical company focused on the development and commercialization of proprietary products that address important therapeutic needs in neuroscience.

Purdue Pharma L.P. and its associated US companies are privately-held pharmaceutical companies known for pioneering research on persistent pain.