Budesonide MMX is an oral corticosteroid currently being investigated in two multi-center Phase III clinical trials involving more than 800 patients in North America and Europe for the induction of remission of mild-to-moderate ulcerative colitis. Santarus will be responsible for overseeing the Phase III US registration clinical trial, and Cosmo and its partner in Europe, Ferring Pharmaceuticals, are overseeing the European Phase III clinical trial.
Rifamycin SV MMX is a broad spectrum, semi-synthetic antibiotic that also has targeted release characteristics when taken orally. Cosmo has completed a Phase II clinical program in traveler’s diarrhea. Santarus will be responsible for the design and execution of a Phase III US registration clinical trial for traveler’s diarrhea, while the European Phase III clinical trial in the same indication will be conducted by Cosmo’s European partner, Dr Falk Pharma.
Under the terms of the agreements, Santarus will pay Cosmo an upfront cash fee of $2.5 million and will issue to Cosmo six million shares of Santarus common stock. These shares will be subject to an initial 15-month restriction on their sale or transfer.
Santarus may also pay Cosmo up to a total of $9 million in clinical and regulatory milestones for the initial clinical indications, up to $6 million in clinical and regulatory milestones for a second indication for Rifamycin SV MMX, and up to $57.5 million in commercial milestones. If and when earned, the milestones will be payable at Cosmo’s option in either Santarus common stock or in cash, subject to certain limitations.
Santarus will reimburse Cosmo approximately $2.8 million by January 31, 2009, which represents Santarus’s 50% share of the Phase III clinical trial costs for Budesonide MMX incurred by Cosmo through mid-November 2008. Going forward, Santarus will be responsible for 50% of the costs associated with the ongoing US registration and European Budesonide MMX Phase III clinical trials and all costs for the future Phase III US registration clinical trial for Rifamycin SV MMX.
Assuming regulatory approval and commercial launch, Santarus will pay to Cosmo tiered royalties on net sales of each product ranging from 12% to 14%, subject to reduction in limited circumstances. Cosmo or its affiliate will be responsible for the manufacture and supply of the products under a supply agreement to be negotiated at a later date, said Santarus.