Watson Pharmaceuticals, Inc. (NYSE:WPI) has terminated its supply and licensing agreements with Stellar Pharmaceuticals Inc (OTCQB:SLXCF) related to Uracyst, a sodium chondroitin sulfate solution for the treatment of interstitial cystitis, a chronic pain condition that affects the bladder.

Watson, which acquired the rights to develop and commercialize Uracyst in December 2006, issued a statement last November saying that, based an evaluation of a U.S. pilot test study, it did not plan to allocate any additional resources to further pursue the product development program for Uracyst.

In connection with the announcement Wednesday over termination of the agreements, Stellar will pay a royalty on net sales of Uracyst in the United States over the life of certain patents related to the product.

"Notwithstanding the termination of the Uracyst supply and licensing agreements, Stellar continues to believe that Uracyst will become a commercially viable product in the United States market," the London, Ont.,-based company said in a release.

Stellar added that it "intends to aggressively seek a new product sponsor" for Uracyst south of the border.

Stellar Pharmaceuticals Inc. has developed and markets in Canada and elsewhere three products based on its core polysaccharide technology: NeoVisc and NeoVisc Single Dose for the symptomatic treatment of osteoarthritis and Uracyst, its patented technology for the treatment of interstitial cystitis, an inflammatory disease of the urinary bladder wall.

Watson is an integrated global pharmaceutical company engaged in the development and distribution of generic pharmaceuticals and specialized branded pharmaceutical products focused on urology and women's health.