Perrigo Settles Patent Litigation

Zacks

Perrigo Company (PRGO) recently agreed to settle its patent litigation regarding Cadence Pharmaceuticals’s (CADX) Ofirmev (acetaminophen) injection. Ofirmev injection is indicated to reduce fever and treat mild to severe pain with or without adjunctive opioid analgesics.

As per the settlement terms, Perrigo is eligible to launch a generic version of Ofirmev injection on December 6, 2020. The generic version of Ofirmev may be launched earlier as well, depending on certain circumstances. Moreover, Perrigo has the rights to be the only authorized generic distributor if Cadence decides to launch an authorized generic product.

According to Wolters Kluwer (WTKWY), Ofirmev annual sales were approximately $42 million.

We note that in November this year, Perrigo agreed to settle another patent infringement lawsuit. The company settled its litigation regarding Cumberland Pharmaceuticals’ (CPIX) Acetadote (acetylcysteine) injection. As per the terms of the settlement agreement, Perrigo can launch a generic version of the drug after its patent expires in May 2026.

Acetadote injection helps to prevent or lessen hepatic injury. As per Wolters Kluwer, Acetadote annual sales were approximately $41 million.

Perrigo also received encouraging news from the US Food and Drug Administration, which recently approved the company and its partner, Cobrek Pharmaceuticals’ Abbreviated New Drug Application (ANDA) for betamethasone valerate foam 0.12%, which is the generic version of GlaxoSmithKline’s (GSK) Luxiq Foam. Importantly, Cobrek has 180-day exclusivity on the product, which had annual branded sales of about $40 million.

Our Recommendation

We currently have a Neutral recommendation on Perrigo. The stock carries a Zacks #3 Rank (Hold). We are encouraged by the recent settlement news in the generics segment. Active patent challenges require litigation, thereby leading to higher general and administration expenses. Therefore, the settlement of these challenges accelerates the availability of low cost generic products and also removes uncertainties associated with litigation. We expect the generic segment to continue performing well thereby driving growth at Perrigo.

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