Valeant Pharmaceuticals International has entered into an exclusive option agreement with Schering-Plough for taribavirin in Japan. In exchange for the exclusive option, Schering-Plough has agreed to waive and release its last right of refusal on taribavirin under a 2000 agreement, providing more flexibility for Valeant to actively pursue partnering arrangements for the rest of the world.

Under the terms of the option agreement, Valeant granted Schering-Plough the option to enter into an exclusive license agreement for the development and commercialization of taribavirin in Japan. Upon exercising the option and entering into the exclusive license agreement, Schering-Plough would provide a $2 million upfront payment to Valeant and pay mid-single digit royalties on net sales of taribavirin in Japan.

Taribavirin, a prodrug of ribavirin, is in phase-II development for the treatment of chronic hepatitis C in conjunction with a pegylated interferon.

"This agreement with Schering-Plough releases our company from the last right of refusal and provides us more flexibility to pursue partnering opportunities with other companies," said J Michael Pearson, Valeant's chairman and chief executive officer. "With the data we have seen so far from the phase-IIb trial, we believe that taribavirin presents an attractive licensing opportunity."

Taribavirin is an investigational compound that has not been approved by the US Food and Drug Administration (FDA) or any other regulatory agency for the diagnosis, mitigation, treatment or cure of any disease or illness.

Valeant Pharma International is a multinational specialty pharmaceutical company that develops, manufactures and markets a broad range of products primarily in the areas of neurology and dermatology.