Following the effective date of termination of the co-promotion agreement there will be no continuing financial commitments for either company, and Santarus will no longer be obligated to pay a high single-digit royalty on Zegerid net sales to Otsuka America.
In addition, Santarus anticipates that it will accelerate the timeframe over which it amortizes the remaining balance of the $15 million up-front payment previously received from Otsuka America in October 2004. The remaining deferred revenue balance related to the up-front payment was approximately $5 million as of March 31, 2008.
Under the co-promotion agreement, Otsuka America has provided promotional support in the US related to Santarus’s Zegerid capsules and powder for oral suspension products. Santarus will continue to promote its Zegerid prescription products in the US with its field sales organization and inVentiv contract field sales representatives.
Gerald Proehl, president and CEO of Santarus, said: “We believe that actions recently taken by other companies to reduce sales force promotion on their branded proton pump inhibitor prescription products has created an opportunity for us to reduce our cost structure, while maintaining our share of voice with our targeted physicians.”