Depomed receives second $500,000 milestone payment from Covidien

Depomed, Inc. (NASDAQ:DEPO) announced today that it has received a second $500,000 milestone payment under its worldwide license agreement with Covidien focusing on the exclusive development of four acetaminophen/opioid analgesic combination products utilizing Depomed’s Acuform® gastric retentive drug delivery technology. The most recent payment from Covidien, which was received in December 2009, relates to the development of a formulation for the second product candidate under the collaboration.

“We are pleased to see these product candidates advancing and potentially triggering further development milestones”

“We are pleased to see these product candidates advancing and potentially triggering further development milestones,” commented Carl A. Pelzel, Depomed’s president and chief executive officer.

Covidien is the largest supplier of controlled pain medications in the United States based on number of prescriptions. The company is expanding the limits of pain therapy by combining proven drugs with innovative delivery systems.

Depomed’s Acuform technology is designed to enable extended and controlled release of oral medications in the upper gastrointestinal tract for once-daily administration, improved treatment tolerability and enhanced compliance and efficacy.

Under the license agreement between Depomed and Mallinckrodt Inc., a Covidien company, Depomed received a one-time upfront payment of $4 million, a milestone payment for the first formulation in October 2009, and could receive up to $63.5 million in additional development milestone payments over the next several years. In addition, Covidien will pay Depomed a royalty on sales of products developed under the license agreement. Covidien is responsible for all development other than certain initial formulation work.