Transcept Pharmaceuticals Inc. (TSPT) – Buzz Stock of the Day

Shares of Transcept Pharmaceuticals, Inc. (NASDAQ: TSPT) jumped $3.75 or 64.7 percent to $9.55 in morning trading on Monday, after the company announced a licensing deal for its insomnia treatment with Purdue Pharmaceuticals for up to $145 million, and royalty payments.

“This agreement is a transforming event for Transcept,” said Glenn A. Oclassen, President and CEO of Transcept Pharmaceuticals in a statement.

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Under the terms of the agreement, Purdue was granted the exclusive rights to sell Intermezzo in the U.S. and is able to negotiate for its approval in Mexico and Canada. Transcept Pharmaceuticals retains the rights to the drug in all other countries and has the option to co-promote Intermezzo to psychiatrists in the U.S.

The agreement states that Purdue will pay Transcept $25 million upfront, and up to $30 million more based on approval timing by the FDA. Additionally, Transcept could receive as much as $90 million more based on future benchmarks related to intellectual property and sales milestones.

The deal also includes royalties of greater than 10 percent and as much as about 25 percent for the Richmond, Calif.-based Transcept. If Transcept exercises the psychiatric co-promotion option, it will receive an additional double-digit royalty on those sales. Transcept can begin co-promotion as soon as one year after launch.

“We are excited to be working with Transcept towards the launch of this potential new entry into the prescription sleep aid market,” said Purdue’s President and CEO John H. Stewart. “This agreement is part of Purdue’s plan to diversify our product portfolio and broaden our commercial focus into therapeutic areas that complement our leadership position in pain.”

The active ingredient in Intermezzo is zolpidem, the same active ingredient in other insomnia sleep aids, such as Ambien. However, Intermezzo only has about one-third-to-one-quarter zolpidem as other insomnia treatments.

“We believe that Intermezzo has the potential to occupy an important position in the substantial worldwide market for prescription sleep aids, and that our U.S. partnership with Purdue is a key step toward the commercial success of Intermezzo.”

Tags: biotech, buzz stocks, pharmaceutical stocks, TSPT

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