(Reuters) - Avanir Pharmaceuticals Inc said it signed a three-year agreement with Merck & Co Inc to co-promote Merck's multibillion-dollar drugs to treat Type 2 diabetes.
Avanir shares rose 11 percent in extended trading after closing at $4.50 on the Nasdaq.
The company said its salesforce will promote Januvia, Janumet and Janumet XR in long-term care facilities such as nursing homes and skilled nursing facilities in the United States from October.
Avanir said in a regulatory filing that it could get up to $60 million from Merck over the three years, from a fixed monthly fee and performance fee.
"I think it's impressive to sign a deal with Merck and obviously, it's not going to cost them very much and it's going to help them get to profitability," Summer Street Research analyst Carol Werther told Reuters.
"The agreement is just for long-term care centers, which is where a lot of their sales force is right now and where they've been most successful."
Merck recorded $4.09 billion in sales from Januvia and $1.66 billion from Janumet in 2012, according to a regulatory filing dated February 28.
(Reporting By Vrinda Manocha in Bangalore; Editing by Maju Samuel)