Here's a very interesting situation. I personally think the chances of Barr launching "at risk" have to be small - they'd be risking $1 billion damages or more. Not sure when the right time to play this is though:
Reuters
Kos Sinks, Generic Drug Blamed
Thursday December 9, 11:06 am ET
CHICAGO (Reuters) - Shares of Kos Pharmaceuticals Inc. (NasdaqNM:KOSP - News) slumped 8 percent on Thursday after an analyst suggested Barr Pharmaceuticals Inc. (NYSE:BRL - News) could launch a copycat version of a key Kos drug earlier than expected.
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Deutsche Bank said Barr could launch a generic version of Kos's Niaspan drug as early as April of 2005. Niaspan is an extended version of the nutrient niacin that elevates levels of so-called good cholesterol.
The companies have sparred in court over when Kos's patent ends.
Barr spokeswoman Carol Cox said the company is leaving all options open. The companies have a February 2006 court date set for Barr's patent challenge to Kos, but, under FDA patent challenge rules, Barr could launch the product as early as April 2005.
In a research note Wednesday, analyst David Steinberg said if Barr launches this early, "it would be a devastating blow to the company's earnings, with the stock falling to the $18 range."
Kos shares slumped $3.32, or 8.1 percent, to $37.91 on the Nasdaq, while Barr shares rose 99 cents, or 2.4 percent, to $43.05.
"We do not believe most investors have factored this risk into the current outlook for Kos," Steinberg said.
Barr, as the first generic-drug company to file to make a generic version of the drug, would have exclusive rights to sell the drug for a period of time.
The only recent example I know of for an "at risk" launch was for Neurontin - but there we were talking a very limited patent life.
Peter
Edit: Paxil and Prilosec generics were also launched at-risk, but in both cases after litigation |
