Actavis/AZN Settle Crestor Litigation

Zacks

Actavis Inc. (ACT) recently entered into a settlement agreement with AstraZeneca (AZN) regarding their patent litigation for Crestor. Actavis was looking to launch its generic versions of Crestor (rosuvastatin calcium) tablets (5, 10, 20 and 40 mg). The settlement agreement also covers Actavis’ rosuvastatin zinc salt product.

Crestor is slated to lose exclusivity in the US on Jul 8, 2016 (including pediatric exclusivity). As per the terms of the agreement, Actavis may launch its generic version of Crestor 67 days before Crestor loses exclusivity on paying 39% of net sales to AstraZeneca.

However, the launch of the generic version of Crestor depends on the final approval from the US Food and Drug Administration (:FDA). In Jun 2011, the FDA granted tentative approval to Actavis' Abbreviated New Drug Application (ANDA) for Crestor.

The deal also allows Actavis to launch its rosuvastatin zinc alternate salt product on or before May 2, 2016, which will not be a generic substitute for Crestor. The company is, however, undecided on the potential launch of the product. Actavis and AstraZeneca have kept the other terms of the agreement under cover.

We believe that the resolution of the dispute is a positive for AstraZeneca and removes a major overhang on its shares.

Crestor is approved for cholesterol management. AstraZeneca recorded Crestor sales of $1.6 billion in 2012, down 8.4% from 2011.

Earlier this month, AstraZeneca announced that three patents protecting Crestor were rendered invalid by the Federal Court of Australia. The three patents including a formulation patent were set to expire by 2020-21. The patents were challenged by companies like Apotex, Ascent Pharma and Actavis. Crestor is already facing generic erosion in Canada.

Actavis currently carries a Zacks Rank #3 (Hold). Other generic players such as Lannett Company Inc. (LCI) and Mylan (MYL) currently look better positioned. While Lannett carries a Zacks Rank #1 (Strong Buy), Mylan carries a Zacks Rank #2 (Buy).

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