UPDATE 1-Valeant sells rights to hepatitis C drug

(Adds details on Infergen patent lapse, rival drugs)

NEW YORK Dec 20 (Reuters) - Valeant Pharmaceuticals International (VRX.N) said on Thursday that it had agreed to sell its U.S. and Canadian rights to Infergen to privately held Three Rivers Pharmaceuticals, which will also acquire the remaining inventory of the hepatitis C drug.

Valeant last month said it was in talks with a potential buyer for the drug, whose sales have suffered from its loss of patent protection in Europe.

Valeant said it would receive about $71 million in cash at closing, which is expected in the first quarter, and up to $20.5 million in two noncontingent payments over the following 18 months.

Infergen, a 10-year-old form of interferon originally developed by Amgen Inc (AMGN.O), is approved for use by itself to treat adults with hepatitis C who already have liver disease.

But it is a relatively niche product compared with two other forms of interferon -- Peg-Intron from Schering-Plough Corp SGP.N and Pegasys from Roche Holding AG (ROG.VX). Each of the two big-selling medicines is used in combination with an antiviral pill called ribavirin, and the two resulting dual therapies are considered the standard of care.

Valeant posted a third-quarter loss, partly because of declining alliance revenue, as Infergen royalties from Roche stopped due to the patent expiration in Europe.

Hepatitis C, a virus now transmitted largely through shared needles but mostly through blood transfusions in earlier decades, steadily damages the liver over many years and is the leading reason for transplants of the organ. (Reporting by Ransdell Pierson in New York and Nachiket Kelkar in Bangalore; Editing by Lisa Von Ahn)