fee will be computed as a percentage of the gross profit, as defined in the License Agreement, earned by TAGI Pharma as a result of sales of the products. The license fee is payable monthly for the term of the License Agreement. The milestone payments will be paid in 6 installments. The first installment was paid upon execution of the License Agreement and the remaining installments are to be paid upon FDA approval and initial shipment of the products to Precision Dose. Two of the Products, hydromorphone hydrochloride, 8 mg, and naltrexone hydrochloride, 50 mg, are approved products recently purchased by Elite and currently being transferred to Elite. Collectively, the brand products and their generic equivalents had total annual sales of approximately $120 million in 2009.
Elite also announced the acquisition of an Abbreviated New Drug Application (ANDA) for a generic product from Epic Pharma LLC ("Epic"). The right to market this product was licensed to Precision Dose pursuant to the License Agreement described above. The acquisition of the ANDA will close on the later of 60 days from the date of the purchase agreement or upon receipt of FDA approval of the ANDA. Upon the closing, Elite will pay a portion of the purchase price, while the remainder of the purchase price will be paid in quarterly installments over a period of three years, beginning at the end of the first full quarter following the closing. The brand product and its generic equivalents had annual sales of approximately $39 million in 2009.
"The Agreement with Precision Dose and TAGI Pharma and the acquisition of an additional generic product continue Elite's strategy of leveraging the manufacturing and development expertise of the company into products that we believe can generate positive cash flow to support and expand our research activities," stated Jerry Treppel,
Chairman and CEO.
"Our Agreements with Elite precisely implement TAGI Pharma's business plan to co-develop, buy, or license select products to bring to the marketplace. This collaboration of our areas of expertise will maximize the strengths and specialties of both companies in the highly competitive generic pharmaceutical market. We anticipate a long and productive relationship with Elite in connection with these Products and future items" said Robert Koopman, President and CEO of Precision Dose and its wholly-owned subsidiary, TAGI Pharma, Inc.