Research And Development Agreements

12 Months Ended

Dec. 31, 2011

Research And Development Agreements [Abstract]

Research And Development Agreements

Note 10 - Research and Development Agreements:

To supplement our own internal development program, we seek to enter into development and license agreements with third parties with respect to the development and marketing of new products and technologies. To date, we have entered into several of these types of agreements and advanced funds to several non-affiliated companies for products in various stages of development. Payments made related to these agreements have been expensed as incurred in accordance with our accounting policies. We believe that the following product development agreements are those that are the most significant to our business.

Generic Business Related

IntelliPharmaCeutics Corp.

In November 2005, Par executed a license and commercialization agreement with IntelliPharmaCeutics Corp. ("IPC") for the development of dexmethylphenidate XR (Focalin XR^®). Initial development costs included a milestone payment of $250 thousand, paid in January 2006. Subsequent milestones for $250 thousand due upon passing all bioequivalence studies and another $250 thousand upon FDA's acceptance for filing the ANDA were both paid in May 2007. In August 2011, we amended the license and commercialization agreement and paid $600 thousand to IPC for additional development costs fully satisfying Par's obligations. Upon launch, IPC can earn up to a maximum of $2,500 thousand depending on the number of parties, generic equivalents and their introduction of the product during the first 180 days from launch. In addition Par has agreed to share profits on all future sales of the product. The agreement is set for a ten year term from commercial launch of the product.

EMET Pharmaceuticals

In the second quarter of 2010, Par acquired from Eagle Pharmaceuticals the rights and obligations of a collaboration arrangement with EMET Pharmaceuticals for mesalamine 400mg delayed release tablet currently in development for an up-front payment of $5,500 thousand that was expensed as research and development. The arrangement provides for additional milestone payments of up to $5,500 thousand based upon certain development activities, FDA approval, certain conditions and sales. The first and second of such milestones were achieved during 2010, and the resultant $500 thousand payments were expensed as research and development. Par will participate in a profit sharing arrangement with EMET based on any future sales.

Catalent Pharma Solutions GMBH (Anchen)

In November 2009, Anchen executed a collaboration agreement with Catalent Pharma Solutions GMBH for the development of lubiprostone capsules. Anchen submitted an ANDA to the FDA seeking approval in February 2010 and received a refusal to file ("RTF") in August 2010 indicating that the ANDA would need to be amended to include additional clinical study data. In response to this RTF, in January 2011 Anchen entered a services agreement with Novum Pharmaceutical Research Services of Delaware, Inc. to perform clinical research services for the development of lubiprostone capsules for $6,400 thousand. Anchen has paid Novum $3,400 thousand in clinical study costs of which $200 thousand was expensed as research and development in the 45 day period in 2011 that Par has owned Anchen. Catalent will be entitled to royalty payments on future sales of lubiprostone under this ANDA.

Strativa Business Related

Optimer Pharmaceutical Corporation

In April 2005, we entered into a joint development and collaboration agreement for an antibiotic compound ("PAR-101") with Optimer. Under the terms of the agreement, Optimer agreed to fund all expenses associated with the clinical trials of PAR-101, while we would have been responsible for the clinical development, submission of the NDA and coordination of legal and regulatory responsibilities associated with PAR-101. In the event that PAR-101 was ultimately approved for marketing, we would have manufactured and would have had exclusive rights to market, sell and distribute PAR-101 in the U.S. and Canada. We were to pay Optimer a royalty on sales of PAR-101 and also had an option to extend the agreement to include up to three additional drug candidates from Optimer. In February 2007, in exchange for $20,000 thousand and certain trailing rights, we terminated the agreement and returned the marketing rights to Optimer. In the first quarter of 2010, Optimer announced positive results from the second of two pivotal Phase 3 trials evaluating the safety and efficacy of fidaxomicin in patients with clostridium difficile infection (CDI), triggering a one-time $5,000 thousand milestone payment due to us under the 2007 termination agreement. The $5,000 thousand was reflected in the consolidated statement of operations in the gain on sale of products rights and other line. In 2011, Strativa earned $4,300 thousand of royalty income from its share of the proceeds from Optimer's sale of certain rights in the fidaxomicin product to a third party. The $4,300 thousand was reflected in the consolidated statement of operations in the other product related revenues line. Under the terms of the 2007 termination agreement, we are also entitled to royalty payments on future sales of fidaxomicin.

Swedish Orphan Biovitrum

In October 2010, we entered into an amended and restated license and supply agreement with Swedish Orphan Biovitrum ("Sobi") covering the European development and commercialization rights of Strativa's Nascobal^®. Strativa acquired the worldwide rights to Nascobal^® from QOL Medical, LLC in March 2009, which included a pre-existing agreement with Sobi. In October 2011, Strativa and Sobi agreed to terminate the amended and restated license and supply agreement.