Santarus, Inc. and Depomed, Inc. announced that they have entered into a promotion agreement granting Santarus exclusive rights to promote Depomed's Glumetza (metformin hydrochloride extended release tablets) prescription products in the US.

Glumetza is a once-daily, extended-release formulation of metformin that incorporates patented drug delivery technology and is indicated as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus. Santarus expects to train its field sales representatives in the third quarter and to begin promotion of Glumetza brand products in the fourth quarter of 2008. Depomed reported Glumetza net sales of $5.2 million in the first quarter of 2008.

Metformin is widely used for the treatment of type 2 diabetes, but many patients do not achieve optimal dosing levels due to gastrointestinal (GI) side effects. The advantage of Glumetza's delivery system is that it allows physicians to rapidly titrate dosing up to 2000 mg a day, which results in a more optimal level of glycemic control without significantly increasing GI side effects compared to a daily dose of 1500 mg of immediate-release metformin.

"We view Glumetza as an important addition to our product portfolio as it addresses a large and growing market in type 2 diabetes," said Gerald T. Proehl, president and chief executive officer of Santarus. "We believe that Glumetza is an excellent product to leverage our sales organization, with good overlap in our called-on physicians in the primary care market and with growth potential. Based on our current launch plans, we expect increased promotional expenses for Glumetza commencing in the third quarter of 2008; however, we believe that the net impact of Glumetza will be neutral in the fourth quarter of this year and accretive in 2009 and beyond."

Under the terms of the promotion agreement, Santarus paid Depomed a $12 million upfront fee, and based on the achievement of specified levels of annual glumetza net product sales, Santarus may pay Depomed one-time sales milestones totalling up to $16 million. Depomed will continue to record revenue from the sales of Glumetza and will pay Santarus a fee ranging from 75% to 80% of the gross margin associated with net sales of Glumetza, defined as net sales less cost of goods and product-related fees paid to Biovail Laboratories.

Santarus will be responsible for all costs associated with its sales force and for all other marketing expenses associated with its promotion of Glumetza. A joint commercialization committee has been formed to oversee and guide the strategic direction of the Glumetza promotion efforts in the US Depomed will be responsible for overseeing product manufacturing and supply, and retains the option to co-promote Glumetza in the future to obstetricians and gynaecologists (Ob/Gyn).

"We are pleased to work with a highly motivated and committed partner like Santarus to focus on driving new prescriptions, launching our new 1000 mg dosage strength and increasing sales of Glumetza," said Carl Pelzel, president and chief executive officer of Depomed. "Santarus has a field-based commercial organization of over 300 sales representatives to promote Glumetza to their targeted physicians. This organization has demonstrated good results in its promotion of Zegerid in the highly competitive proton pump inhibitor market, and we look forward to strong results with Glumetza."

Glumetza (metformin hydrochloride extended release tablets) is indicated as an adjunct to diet and exercise to improve glycemic control in adult patients (18 years and older) with type 2 diabetes. Glumetza may be used concomitantly with a sulfonylurea or insulin to improve glycemic control in adults. Glumetza is available in 500 mg and 1000 mg tablets.