Adderall XR: Shire Shares Rise on Settlement With Barr
Bloomberg By Etain Lavelle – Aug 15, 2006
Shire Plc shares rose after the company settled a patent lawsuit with Barr Pharmaceuticals Inc., protecting Shire’s best-selling Adderall XR hyperactivity drug from cheaper rival copies until 2009.
Barr won’t be permitted to market a generic version of Adderall XR in the U.S. until April 1, 2009, unless another drugmaker introduces a copycat version, Basingstoke, England- based Shire said. Barr was the first company to seek U.S. Food and Drug Administration permission to sell a generic version of Adderall XR.
“Some people will be putting their numbers up as they had assumed generic competition earlier,” Jon Senior, an analyst at Evolution Securities in London, said in an interview. Senior has a “sell” rating on the stock.
Adderall XR accounts for 25 percent of the U.S. market for medicines to treat attention deficit and hyperactivity disorder, which is characterized by inattentiveness and impulsive behavior and affects around 5 million children. The drug brought in $220.7 million of Shire’s $376 million in revenue in the second-quarter.
Shares of Shire rose 6.5 pence, or 0.7 percent, to 888 pence at the close of trading in London. They’ve gained 19 percent this year.
U.S. regulators earlier this month rejected a similar agreement between Sanofi-Aventis SA and Bristol-Myers Squibb Co. and generic-drug maker Apotex Inc. That pact, which would give Apotex $40 million to keep a cheaper of copy of the top-selling blood thinner Plavix off the market, is different than the one between Shire and Barr, Shire Chief Executive Officer Matthew Emmens said.
A major difference is the payment of money, Emmens said. “There’s not a direct cash payment here,” he said.
Shire settled with generic-drug maker Impax Laboratories in January. It also asked U.S. regulators to require more rigorous tests of any Adderall XR copy in a so-called citizen’s petition, raising safety concerns about a generic version of the treatment.
Teva Pharmaceuticals Inc., the world’s biggest generic-drug maker, and Colony Pharmaceuticals Inc. are also seeking to make cheaper copies of Adderall XR. Shire’s settlement with Impax stopped it from selling a cheaper version of the drug until 2010, or 181 days after Barr launches its Adderall XR copy.
“We do not expect to have generic competition in the U.S. until 2009,” Shire’s Emmens said on a conference call.
In two additional deals agreed between the two drugmakers last night, Woodcliff Lake, New Jersey-based Barr will buy the original formulation of Adderall for $63 million and Shire will gain the rights to Barr’s oral contraceptive and trans-vaginal ring in five European countries, for up to $165 million.
Shire said it will pay an initial $25 million and as much as $140 million over eight years to move into the market for women’s health.
The agreements stand on their own and the company is confident they will receive approval from the U.S. Federal Trade Commission, Emmens said on the call.
“The agreement is subject to FTC investigation and the two companies were at pains to ensure no cash payment was made in relation to this agreement,” Sav Neophytou, an analyst at Seymour Pierce with a “hold” rating on Shire, said in an e- mail. “The Federal Trade Commission will take a keen interest on a concurrent licensing agreement reached between Shire and a subsidiary of Barr Labs.”
Sanofi and Bristol’s agreement with Apotex Inc is now being investigated by the U.S. Department of Justice.
Federal regulators blocked the agreement earlier this month. In 2003, Bristol-Myers resolved allegations that it misused its patents to thwart generic competition to the cancer drug Taxol and the anti-anxiety drug Buspar by agreeing to a settlement with the U.S. Federal Trade Commission.
Among the terms was a 10-year limit on Bristol-Myers’s ability to settle patent suits if the generic-drug company received “anything of value” and agreed not to sell a copycat drug for any period of time. Patent settlements would have to be reviewed by the FTC and attorneys general of U.S. states, who had also sued Bristol-Myers over Buspar and Taxol.
Barr reported today that net income for the quarter ended June 30 almost doubled to $82.3 million, or 76 cents a share, from $42.1 million, or 40 cents, a year earlier.
To contact the reporter on this story: Etain Lavelle in London at at firstname.lastname@example.org.