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PDL gets diabetes drug payment rights from Depomed

NEW YORK (AP) -- PDL BioPharma said Monday it is buying the rights to receive royalty and milestone payments on several Type 2 diabetes treatments from Depomed in a deal valued at $240.5 million.

The biggest earner in the group is Glumetza, which is marketed by Santarus Inc. PDL said Depomed received $42.8 million in royalty payments on that drug in 2012. PDL will also get payments on sales of Merck & Co.'s Janumet XR and several experimental drugs: a combination of Johnson & Johnson's drug Invokana with extended-release metformin, an extended-release metformin drug that is being studied by Boehringer Ingelheim of Germany, and payments from LG Life Sciences and Valeant Pharmaceuticals International Inc.

PDL said it will receive all royalty and milestone payments from those products until it receives $481 million in total revenue. After that, PDL and Depomed will share the payments equally.

Depomed said it will use the proceeds to buy drugs that will help drive long-term sales growth and build on its pain and neurology drugs. Its shares climbed 87 cents, or 12 percent, to $8.10 in after-hours trading after declining 10 cents during regular trading.

Shares of PDL BioPharma rose 3 cents to $8.06 in late trading, after losing 12 cents during the regular session.

Depomed Inc. has three approved drugs. Gralise is a version of gabapentin, a treatment for pain and epilepsy that has been on the market for more than a decade, but it only needs to be taken once per day. Depomed also makes Zipsor, a treatment for inflammatory pain, and Lazanda, a nasal spray designed to treat severe pain in cancer patients.

Depomed said it also has collaborations with Johnson & Johnson on its nerve pain drug Nucynta ER and with Mallinckrodt PLC on other compounds.

Depomed reported $90.8 million in total revenue in 2012. That included $44.5 million from royalties, $18.8 million from licenses and other sources, and $27.5 million from product sales.

PDL BioPharma Inc. helped develop Roche's cancer drugs Avastin, Herceptin, and Kadcyla, and its eye drug Lucentis, and Biogen Idec Inc.'s multiple sclerosis drug Tysabri. PDL gets royalty payments based on sales of those products, and it had $374.5 million in revenue in 2012, all of it from royalty payments.