(RTTNews) – Watson Pharmaceuticals Inc. (WPI) announced Friday that it completed the acquisition of the U.S. rights to Columbia Laboratories’ (CBRX ) Crinone and Prochieve progesterone gel product line for an upfront payment of $47 million. Watson expects to immediately begin the marketing of the products in the U.S, which are indicated for infertility and secondary amenorrhea, the absence of a menstrual period in a woman of reproductive age, and prevention of pre-term birth.

As per the agreement, Watson received 11.2 million newly issued shares of Columbia common stock. Further, Watson would pay a royalty on its sales of the progesterone gel product and any next generation products. As per a supply agreement, Columbia will be responsible for manufacturing the progesterone gel products. On successful completion of clinical development milestones, receipt of regulatory approvals and product launche, Watson will pay up to $45.5 million to Columbia.

The progesterone gel product is currently being evaluated in a late-stage trial for safety and efficacy in preventing pre-term birth in women with a short cervix. Columbia will be responsible for the anticipated clinical and regulatory costs related to approval for the pre-term birth indication, while any excess development costs over a defined cap, if any, as well as costs related to the development of the second generation product will be the responsibility of Watson. All principal and accrued interest of a previous $15 million loan by Watson to Columbia to support clinical development of the pre-term birth indication were waived by Watson.

CrinonE addresses progesterone deficiency in infertile women, as a part of Assisted Reproductive Technology or ART treatment. Watson said five clinical trials established that patients preferred Crinone over competing products. Another trade name for the product is Prochieve, which is available in a 4% and an 8% concentration. Prochieve 4% is indicated for the treatment of secondary amenorrhea.

The 8% concentration gel is currently being evaluated in a phase 3 clinical program for safety and efficacy in preventing pre-term birth in women with a cervical length between 1.0 and 2.0 centimeters as measured by transvaginal ultrasound at mid-pregnancy. The primary endpoint of this study is a reduction in the incidence of pre-term birth at less than or equal to 32 weeks gestation vs. placebo. Preliminary results from the study, dubbed Pregnant-Prochieve Extending GestatioN A New Therapy, are expected at the end of 2010. Positive outcome would result in a New Drug Application filing in 2011.

Pre-term birth occurs in one of every eight live born infants, and short cervix is the single most important predictor of pre-term birth. According to Watson, there are currently no products approved for the prevention of pre-term birth.

Thursday, Columbia announced stockholder approval for the sale of the progesterone related assets to Watson, and for increasing the number of authorized shares of Columbia’s common stock, $0.01 par value per share, from 100 million to 150 million. Under the agreement signed on March 3, Columbia then said it would receive royalties of 10% to 20% of annual net sales of progesterone products.

WPI is currently trading on the NYSE at $41.16, up $0.51 or 1.25%. CBRX is currently trading on the NASDAQ at $1.01, down $0.04 or 3.81%.

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