Somaxon Announce Milestone Payments of Up to $129M

Somaxon Pharmaceuticals SOMX and Paladin Labstoday announced that they have entered into an exclusive collaboration under which Paladin will commercialize Silenor (doxepin) for the treatment of insomnia characterized by difficulty with sleep maintenance in Canada, South America and Africa. According to IMS Canada, the value of the Canadian insomnia market, mainly comprised of zopiclone, exceeded $79 million in 2010 alone and has been growing at a 5 year CAGR of 10%. Under the terms of the agreements, Somaxon will receive an up-front payment of US$500,000, and Paladin will purchase 2,184,769 shares of Somaxon's common stock for a purchase price of US$5 million. Once Silenor is commercialized in the licensed territories, Somaxon will also be eligible to receive sales-based milestone payments of up to US$128.5 million as well as a tiered double-digit percentage of net sales in the licensed territories. Paladin will be responsible for regulatory submissions for Silenor in the licensed territories and will have the exclusive right to commercialize Silenor in the licensed territories. Governance of the collaboration will occur through a joint committee structure. "Paladin is the ideal partner for the commercialization of Silenor in Canada and the emerging markets given its impressive track record of achieving regulatory approval and effectively commercializing branded pharmaceutical products," said Richard W. Pascoe, Somaxon's President and Chief Executive Officer. "This transaction helps us further our goal of maximizing the value of Silenor for our stockholders, as we estimate that the licensed territories present a very significant addition of people suffering from insomnia. We have also maintained rights to the product in the United States, Europe and Japan."