Labopharm monetizes future royalty payment stream for RYZOLT through subsidiary

Labopharm Inc. (TSX: DDS; NASDAQ: DDSS) today announced that, through its wholly owned subsidiary, Labopharm Europe Limited, it has monetized the expected future royalty payment stream for RYZOLT(TM) (once-daily tramadol).

To facilitate the transaction, Labopharm has further amended its license agreement with Purdue Pharma Products, L.P. for RYZOLT(TM) for the U.S. The second amendment to the license agreement provides for the restructuring of the royalty payment terms for RYZOLT(TM) such that Labopharm will, prior to the end of 2010, receive a special royalty payment from Purdue of US$4.8 million and a one-time payment of US$500,000 as final settlement of any past due royalties from the sale of RYZOLT(TM) owed to Labopharm by Purdue, including royalties for the third quarter of 2010. In addition, Labopharm is eligible to receive two additional special royalty payments: US$1 million upon net sales of RYZOLT(TM) (or any authorized generic thereof) exceeding US$20 million in any calendar year until 2020; and US$2 million upon net sales of RYZOLT(TM) (or any authorized generic thereof) exceeding US$40 million in any calendar year until 2020. Other than the aforementioned special royalty payments, Purdue will no longer have any obligation to make royalty payments to Labopharm on net sales of RYZOLT(TM).

"The monetization of the future expected royalty payments from RYZOLT(TM) provides Labopharm with additional liquidity as we commercialize new products such as OLEPTRO(TM) and twice-daily tramadol-acetaminophen," said James R. Howard-Tripp, President and Chief Executive Officer of Labopharm Inc.

The US$4.8 million special royalty payment and the US$500,000 payment will serve to reduce the US$9.3 million due Purdue for Labopharm's share of litigation costs incurred by Purdue to enforce certain of Purdue's U.S. patents related to RYZOLT(TM). Under the terms of the amended license agreement, Labopharm shall no longer be responsible for any litigation costs incurred by Purdue related to once-daily tramadol patents.

Labopharm will continue to supply Purdue with finished packaged RYZOLT(TM) product for the U.S. market until such time as Purdue exercises its option to manufacture and package the product upon notice to Labopharm in accordance with the terms of the amended license agreement.

Source:

Labopharm Inc.

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