Shares of drug maker, Penwest Pharmaceuticals Co. (Nasdaq: PPCO) were up as much as 21 percent in morning trading on Tuesday after the company announced that it settled a patent litigation with Impax Laboratories, Inc. (Nasdaq: IPXL) over the production and sale of a generic version of the pain drug Opana, which is jointly developed by Penwest and Endo Pharmaceuticals Holdings, Inc. (Nasdaq: ENDP).

Penwest shares rose as high as $3.38, up from Monday’s closing price of $2.78 per share.

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Penwest and Endo have agreed to grant Impax a license to sell the copycat on Jan. 1, 2013. Impax will have 180 days of marketing exclusivity for 5 mg, 10 mg, 20 mg, 30 mg and 40 mg tablets of the drug, Reuters reported. Impax could also get up to $40 million in milestones from Endo for an Impax brand drug the two companies will promoted together outside the field of neurology. Further terms of the settlement were not disclosed.

Endo and Penwest also settled a similar patent litigation with Sandoz Inc, a unit of Swiss drugmaker Novartis AG (NOVN.VX), granting Sandoz a license to sell the generic of the drug on Sept. 15, 2012.