Ranbaxy gains US FDA approval for Absorica

India’s largest drugmaker Ranbaxy Laboratories (AB: BO) has received approval from the US Food and Drug Administration for Absorica, a novel, patented brand formulation of the acne medication isotretinoin, developed by Canadian firm Cipher Pharmaceuticals (TSX: DND; OTC: CPHMF.PK), for the treatment of severe recalcitrant nodular acne.

As a result of the FDA approval of Absorica, Cipher will receive a $9.0 million milestone from Ranbaxy – which is majority owned by Japan’s Daiichi Sankyo, around $4.5 million of which will be shared with Galephar. This milestone will be reflected in Cipher's cash balance at the end of the second quarter of 2012.

Going forward, Cipher will also receive royalties on net US sales and is eligible for future milestone payments based on sales targets. Under the deal with Ranbaxy, Cipher is responsible for product supply and manufacturing. Ranbaxy is expected to launch Absorica in the USA in the fourth quarter of 2012.