* Says agreed to develop up to five generic compounds
* Says will receive milestone and royalty payments
* Shares up as much as 7 pct
April 9 (Reuters) - Penwest Pharmaceuticals Co PPCO.O said it entered into an agreement with privately held generic manufacturer Alvogen Inc to select up to five compounds for generic development.
The company said it will receive milestone and royalty payments on formulation of the compounds.
Alvogen will be responsible for manufacturing, clinical trials and regulatory filings for each of the formulations, as well as marketing of the products worldwide.
Shares of Penwest were up 6 percent at $3.70 in early-morning trade Friday on Nasdaq. They touched a high of $3.75 earlier in the session. (Reporting by Krishnakali Sengupta in Bangalore; Editing by Maju Samuel)