Ligand, Organon terminate Avinza co-promotion deal

By E. Janene Geiss

Philadelphia, Jan. 17 - Ligand Pharmaceuticals Inc. said Tuesday that it has terminated its Avinza co-promotion agreement with Organon USA, Inc., returning the Avinza rights to Ligand.

The effective termination date was Jan. 1, but the companies have agreed to continue to cooperate during a transition period ending Sept. 30, 2006 to promote the product, according to a company news release.

That transition period cooperation includes a minimum number of product sales calls per quarter, 100,000 for Organon and 30,000 for Ligand with an aggregate of 375,000 and 90,000 respectively for the transition period, as well as the transition of ongoing promotions, managed care contracts, clinical trials and key opinion leader relationships to Ligand, officials said.

During the transition period Ligand will pay Organon an amount equal to 23% of Avinza net sales as reported by Ligand.

Ligand said it also will pay and be responsible for the design and execution of all clinical, advertising and promotion expenses and activities.

"We are pleased to reach this agreement on Avinza with Organon which better aligns the strategic and financial interests of both parties to the realities of each party's business and situation today," David E. Robinson, Ligand chairman, president and chief executive officer, said in the release.

"This new agreement will give us the flexibility to explore all strategic alternatives for Avinza and Ligand with various potential strategic partners in the coming months," Robinson added.

The companies said they have resolved their disagreement concerning prior co-promotion fees. Ligand will pay Organon $14.75 million by Jan. 30.

In consideration of the early termination and return of rights under terms of the agreement, Ligand said it will unconditionally pay Organon $37.75 million on or before Oct. 15, 2006.

Ligand also said it will further pay Organon $10 million on or before Jan. 15, 2007, provided that Organon has made its minimum required level of sales calls.

Under certain conditions, including change of control, the cash payments will accelerate. In addition, after the termination, Ligand said it will make quarterly royalty payments to Organon equal to 6.5% of Avinza net sales through Dec. 31, 2012 and thereafter 6% through patent expiration, currently anticipated to be November 2017, officials said.

Avinza (oral morphine sulfate extended-release capsules) is the first once-a-day treatment for chronic moderate-to-severe pain in patients who require continuous, around-the-clock opioid therapy for an extended period of time, officials said.

Ligand is a San Diego pharmaceutical company that develops and markets new drugs in the areas of cancer, pain, skin diseases, men's and women's hormone-related diseases, osteoporosis, metabolic disorders and cardiovascular and inflammatory diseases.

Based in Roseland, N.J., and Oss, The Netherlands, Organan is a pharmaceutical company that develops prescription medicines for gynecology, mental health and anesthesia.

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