Depomed seeks resolution of dispute with Abbott Labs over neuralgia drug candidate DM-1796

US drugmaker Depomed (Nasdaq: DEPO) saw its shares plunge 22.5% to $5.10 on Tuesday, after it said that it will engage in a mediation process with a unit of health care major Abbott Laboratories (NYSE: ABT) regarding Abbott's commercialization obligations related to DM-1796, an investigational, once-daily formulation of gabapentin for the management of post-herpetic neuralgia (PHN). DM-1796 was developed by Depomed and is licensed to Abbott Products in the USA, Canada and Mexico for the treatment of pain.

Carl Pelzel, Depomed's president and chief executive, said: "We believe DM-1796 meets an important need for sufferers of PHN, as evidenced by the Food and Drug Administration's decision to grant DM-1796 Orphan Drug status on the basis of its side effect profile. We at Depomed want to ensure that this important therapy is available to patients as soon as possible following FDA approval, which could occur on the upcoming January 30 PDUFA date. Should that occur, the product's full commercial profile can be introduced to the marketplace. DM-1796 fills a very significant unmet market need and we hope to see it effectively marketed."

The parties' dispute