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Biopharmaceuticals Licensing Litigation

 News Release - December 21, 2006

Depomed Receives $10 Million License Fee from Esprit and Withdraws Arbitration Proceeding

MENLO PARK, Calif. & EAST BRUNSWICK, N.J.--(HSMN NewsFeed)--Depomed, Inc. (NASDAQ:DEPO ) and Esprit Pharma, Inc. announced today that Esprit has paid Depomed the $10 million license fee payment due under the parties' license agreement for ProQuin® XR, the extended release formulation of the antibiotic ciprofloxacin developed by Depomed and exclusively licensed in the United States to Esprit. In addition, Depomed and Esprit have agreed to commence discussions toward a mutually agreeable restructuring of their license agreement after the new year. In the meantime, the existing agreement will remain in effect.

Also, Depomed has agreed to withdraw the notice of breach and demand for arbitration related to the license agreement announced on December 18, 2006. The parties do not intend to comment on the specifics of their discussions unless and until a definitive arrangement is documented.

"We look forward to a productive dialogue with Esprit," commented John W. Fara, Ph.D., chairman, president and chief executive officer of Depomed.

John T. Spitznagel, Esprit's chairman and chief executive officer, added, "We are pleased to be moving forward discussions with Depomed toward establishing a new agreement that is beneficial to both parties."

About Depomed, Inc.

Depomed, Inc. is a specialty pharmaceutical company utilizing its innovative AcuForm(TM) drug delivery technology to develop novel oral products and improved, extended release formulations of existing oral drugs. AcuForm-based products are designed to provide once daily administration and reduced side effects, improving patient convenience, compliance and pharmacokinetic profiles. ProQuin® XR (ciprofloxacin hydrochloride) extended-release tablets have been approved by the FDA for the once daily treatment of uncomplicated urinary tract infections and are currently being marketed in the United States. In addition, once daily Glumetza(TM) (metformin hydrochloride extended release tablets) has been approved for use in adults with type 2 diabetes and is currently being marketed in the United States and Canada. The company is conducting a Phase III trial in postherpetic neuralgia and has completed a Phase II trial in diabetic peripheral neuropathy with its product candidate, Gabapentin GR(TM). Additional information about Depomed may be found at its web site, www.depomedinc.com.

About Esprit Pharma

Esprit Pharma is a privately held, niche-oriented pharmaceutical company located in East Brunswick, NJ, committed to improving patient outcomes and well-being within the urology and women's health care fields. Esprit focuses on serving the unique needs of physicians by identifying and selectively acquiring and maximizing the potential of approved and late-stage development medicines for these specialty markets and providing support through internal expertise and a dedication to medical education. For additional information, visit the Esprit website at www.espritpharma.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. The statements that are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties including, but not limited to, those related to Depomed's relationships and the resolution of disputes with collaborative partners; expectations regarding commercialization of products; Depomed's research and development efforts, including pre-clinical and clinical testing; regulation by the FDA and other government agencies; the timing of regulatory applications and product launches; and other risks detailed in Depomed's Securities and Exchange Commission filings, including the company's Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. Depomed undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.


Source: Depomed

Issuer of this News Release is solely responsible for its content.
Please address inquiries directly to the issuing company.



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