The share price of Anacor Pharmaceuticals Inc. (ANAC - Snapshot Report) shot up 28.4% after the announcement of an interim award in favor of Anacor in a breach of contract dispute with Dow Pharmaceutical Sciences, Inc. -- a wholly owned subsidiary of Valeant Pharmaceuticals Inc. (VRX - Analyst Report). Anacor will receive $100 million from Valeant in damages plus costs and fees.
We note that in Oct 2012, Anacor had issued a notice to Valeant seeking to commence arbitration of a breach of contract dispute under a master services agreement of Mar 2004 between Anacor and the erstwhile Dow Pharma. The agreement was about certain development services provided by the erstwhile Dow Pharma in connection with Anacor’s Jublia for the treatment of onychomycosis -- a fungal infection.
Anacor expects confirmation of the award by year end. Following the confirmation Valeant can appeal against the decision within a maximum of 6 months.
Valeant stated that the arbitrator has not granted an injunction or ongoing royalty. This implies that the arbitrator's decision does not prevent the launch of Jublia post approval. Anacor had sought an award of at least $215 million plus injunctive relief.
Earlier this month Anacor was in the news when the U.S. Food and Drug Administration (FDA) accepted Anacor’s New Drug Application (NDA) for an anti-fungal onychomycosis candidate, tavaborole. A response regarding tavaborole should be out by Jul 29, 2014.
Anacor carries a Zacks Rank #3 (Hold). Currently, companies like Isis Pharmaceuticals, Inc. and AMAG Pharmaceuticals Inc. (AMAG - Analyst Report) look attractive with a Zacks Rank #1 (Strong Buy).