UPDATE 1-Depomed settles patent lawsuit with Teva unit

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April 7 (Reuters) - Specialty pharmaceutical company Depomed Inc (DEPO.O: Quote, Profile, Research) said it will receive a one-time payment of $7.5 million for the settlement of a patent lawsuit with a unit of generic drugs company, Teva Pharmaceuticals Industries Ltd (TEVA.O: Quote, Profile, Research).

Depomed had sued the unit, IVAX Corp, in January 2006 claiming patent infringement by IVAX's Glucophage XR, or extended release metformin hydrochloride tablets for the treatment of diabetes.

Under the terms of the settlement, Depomed will also get up to $2.5 million in royalty, for granting Teva a non-exclusive license allowing it to continue marketing the generic version of Glucophage XR.

Shares of the company rose about 3 percent to $3.60 in trading after the bell, after closing at $3.50 on Nasdaq Monday. (Reporting by Abhishek Chanda in Bangalore)