Indevus Pharmaceuticals Inc. Tuesday said it agreed to acquire Valera Pharmaceuticals Inc. in a stock swap worth about $120 million, plus potential contingent payments.

The two companies also entered into a co-promotion agreement under which Indevus' sales force will co-promote Vantas, a treatment for advanced prostate cancer, in the United States.

Indevus said it will pay $7.75 per share for Valera, a 43 percent premium to its Monday closing price. Valera has traded between $4.49 and $12 over the past 52 weeks and was recently up $2.34 in premarket trading, to $7.75.

The company has also agreed to make contingent payments of up to $3.50 per share based on the achievement of future product milestones.

Indevus said the purchase of Cranberry, N.J.-based Valera, which focuses on urology and endocrinology products, will add to its earnings within two years.

"Upon closing, Indevus' robust product portfolio will include three marketed products, and the combined company anticipates five new product launches within two years, including three products from Valera," said Glenn L. Cooper, chairman and chief executive of Indevus.

Under the co-promotion agreement, Indevus will get royalties of 13.5 percent on sales of Vantas up to a specified unit level and increases to 30 percent above the specified level. For sales of Vantas to specified specialty pharmacy accounts, Indevus will receive royalties of 35 percent. Indevus anticipates beginning to co-promote Vantas in January 2007.

Third-quarter sales of Vantas declined 21 percent to $2.9 million, reflecting decreases in Medicare reimbursement rates plus pressure on unit shipments because of price discounting of a competitive product, Valera said last month.

Indevus shares closed Monday at $7.86 on the Nasdaq, where they have traded in a 52-week range of $3.35 to $8.06.