CHICAGO – Barr Pharmaceuticals Inc. (BRL) and Teva Pharmaceutical Industries (TEVA) on Tuesday said they have entered into an agreement to launch a generic version of Sanofi-Aventis' Allegra allergy tablet before a U.S. court rules on patent challenges.
The news lifted the shares of Teva and Barr, while sending Sanofi shares down by as much as 1.5 percent.
Barr last week received U.S. regulatory approval to sell a copycat version of the drug, which had sales of about $1.4 billion in the 12 months ended in June. As the first company to seek U.S. approval for generic Allegra (search), Barr would have 180 days of marketing exclusivity.
Teva, which has been pursuing its own generic version of Allegra, will now be able to launch earlier, the companies said.
Analysts said the launch was a bit daring because it takes place so early in the legal process.
"Seldom are "at risk" launches done ahead of having even a district court ruling," Tim Anderson, an analyst at Prudential said in a research note. "This patent case likely won't go to court until early 2006."
The drugmakers could end up paying for the generic launch if the U.S. court rules against them, even though U.S. health authorities have approved their version of Allegra.
Sanofi is defending its patents in the hope of blocking generic copies until Allegra's patents expire, the latest in 2017. It expects the trial to begin by the end of the year, but so far, the judge has not set any date.
Sanofi-Aventis (search) shares had shed 1.5 percent to 67.90 euros, underperforming the DJ Stoxx health care index, which was up 0.6 percent at the time.
The news also dragged down shares of Albany Molecular Research Inc.(AMRI), which earns royalties from worldwide sales of Allegra for patents relating to the drug's active ingredient. Its shares fell 18.8 percent, down $3.19, to $13.77 in late morning trading on Nasdaq.
Barr shares rose $3.48, or 7.6 percent, to $49.11, while the shares of Teva rose 66 cents, or 2 percent, to $33.56 on Nasdaq.
Under the terms of the deal, Barr has taken steps with U.S. regulators to allow Teva to launch the drug within Barr's 180- day period of exclusivity.
In return, Barr will receive a negotiated percentage of the gross profit of Teva's product, both during and after the exclusivity period.
Teva will record revenue resulting from the sales of the product and remit the negotiated percentage of its gross profit to Barr.
Prudential analyst David Woodburn in a research note said the launch of a generic Allegra came sooner than expected.
He expects the initial 6 months of exclusivity, after sharing gross profit with Teva, could deliver around 7 cents a share of earnings to Barr, most of which would occur in 2005.
For Teva, he expects the deal would net around 2 cents of earnings, with most of that in 2005.
Barr and Teva have been successful in court at invalidating a number of patents protecting the drug, but several patents remain. Although no trial date has been set, the companies expect a trial to occur sometime in 2006.
"The agreement with Teva enables us to maximize the opportunity, while sharing the risk of the ongoing litigation," said Bruce L. Downey, Barr's chairman and chief executive, in a statement.
The companies plan to launch 30 mg, 60 mg and 180 mg tablets of Fexofenadine Hydrochloride, the generic version of Allegra.