Cygnus And Sanofi Reach Settlement

Settlement has been reached between Cygnus and Sanofi after a three-yearproceeding over claims that Cygnus was bound by an exclusive agreement with the French drugmaker for the development of transdermal systems in the field of hormone replacement therapy. Cygnus will recognize a non-recurring expense in its third-quarter results, which will inlcude the cash, promisory notes and minimum royalty payments specified.

Under the settlement, Cygnus will pay Sanofi $14 million in cash, and pay royalties of 6.5%-8.5% on sales of two specified HRT products, as well as issuing a promissory note for $6 million, payable in full at the end of four years. Sanofi had originally sought in excess of $60 million.

The settlement terminates Cygnus' agreement with Sanofi, and despite the reduction in profitability of the two HRT products, Cygnus president Gregory Lawless said the company was pleased to be free of any obligations to Sanofi and happy the "time- consuming arbitration" was over.