Watson Pharmaceuticals, Inc. (NYSE: WPI) today announced an agreement to expand their Women's Health brand product portfolio with the acquisition of the exclusive U.S. rights to Columbia Laboratories, Inc.'s bioadhesive progesterone gel products currently marketed under the trade names CRINONE® and PROCHIEVE® for the indications of infertility and secondary amenorrhea.
The two companies will collaborate in the ongoing Phase 3 development program toward a new indication for these products for the prevention of preterm birth in women with a short cervix, as well as a global development program for second-generation products for this indication and infertility. Watson will also acquire 11.2 million shares of Columbia common stock.
The acquisition is subject to customary closing conditions, including the approval of Columbia's stockholders. The closing of the acquisition is expected to occur in the second quarter of 2010. After the close of the acquisition, Watson intends to immediately begin marketing CRINONE® and PROCHIEVE® in the U.S. to reproductive endocrinologists and Ob/Gyns through the existing Brand Sales Forces.
Under the terms of the agreement, Watson will provide Columbia with an initial $47 million payment and will receive exclusive progesterone gel product rights in the U.S. and 11.2 million newly issued shares of Columbia common stock. Watson will also have the right to designate a member of Columbia's board of directors. Additional contingent payments related to the successful completion of clinical development milestones, receipt of regulatory approvals and product launches could total approximately up to $45.5 million. Watson will also pay Columbia a royalty on Watson's sales of the progesterone gel product and any next generation products. Columbia will be responsible for the anticipated clinical and regulatory costs related to obtaining approval for the progesterone gel product for prevention of preterm birth in women with a short cervix. Excess development costs over a defined cap, if any, as well as costs related to the development of the second generation product will be the responsibility of Watson. Pursuant to a supply agreement, Columbia will be responsible for manufacturing the progesterone gel products.