Depomed says it got a $500K payment after Covidien started testing extended-release pain drug

Depomed gets $500K milestone payment from Covidien

MENLO PARK, Calif. — Depomed received a $500,000 payment from its partner Covidien PLC, which has started human testing of an extended-release painkiller using its technology.

Covidien began doing clinical testing of an oral drug that is designed to be taken once a day and give extended pain relief. Depomed licensed the drug to Covidien’s Mallinckrodt unit for $4 million upfront, and it has received $1.5 million in milestone payments. It could get another $62.5 million in payments over the next two years, as well as royalties on sales if any drugs are approved.

Covidien has the right to develop up to four drugs under the agreement.

In afternoon trading, shares of Depomed Inc. rose 18 cents, or 4.3 percent, to $4.40.