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Actavis, Inc. (ACT - Analyst Report) recently confirmed that it is looking to get its generic version of Horizon Pharma, Inc.’s (HZNP - Snapshot Report) Rayos (prednisone delayed-release tablets, 1 mg, 2 mg and 5 mg) approved in the U.S. The company has filed an Abbreviated New Drug Application (ANDA) with the U.S. Food and Drug Administration (FDA) for its generic version of the drug which is approved as an anti-inflammatory or immunosuppressive agent for certain allergic, dermatologic, gastrointestinal, hematologic, ophthalmologic, nervous system, renal, respiratory, rheumatologic, specific infectious diseases/conditions and organ transplantation; the treatment of certain endocrine conditions; and palliation of specific neoplastic conditions.

In response to Actavis’ Paragraph IV filing, Horizon Pharma and Jagotec AG have filed a patent infringement lawsuit against Actavis in the U.S. District Court for the District of New Jersey. The filing of the lawsuit within the stipulated time period under the Hatch-Waxman Act ensures that the FDA cannot grant final approval to Actavis’ generic for up to 30 months or the court’s decision, whichever is earlier.

Actavis believes it may be the first-to-file an ANDA for a generic version of Rayos – if this is the case, Actavis would be entitled to 180 days of exclusivity on gaining FDA approval for its candidate. Rayos was launched in the U.S. in Dec 2012. Net sales of Rayos in the first half of 2013 were $0.9 million.

Actavis currently carries a Zacks Rank #2 (Buy). We note that Actavis is working on strengthening its branded product portfolio. Earlier this year, Actavis had announced its intention to acquire Warner Chilcott . We are positive on this deal which makes strategic and financial sense. The deal is expected to be immediately accretive. Moreover, it will provide strong operating cash flow and allow Actavis to de-lever its balance sheet. The tax rate will also be significantly below current levels.

Other companies that currently look well-positioned include Supernus Pharmaceuticals, Inc. (SUPN - Snapshot Report), which is a Zacks Rank #1 (Strong Buy) stock.

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