Watson-Columbia Drug's NDA Accepted

Watson Pharmaceuticals Inc. ( ) along with Columbia Laboratories Inc. ( CBRX ) recently announced that the latter’s New Drug Application (NDA) for Prochieve (progesterone gel) has been accepted by the US Food and Drug Administration (FDA). The companies are looking to get Prochieve approved for the reduction of preterm birth in women with short uterine cervical length in the mid-trimester of pregnancy.

However, Columbia Labs has withdrawn its request for priority review of the drug, following which the FDA has set a target date of February 26, 2012 for Prochieve.

In July last year, Watson Pharma had acquired the US rights to Columbia Labs’ products Prochieve and Crinone. According to the purchase and collaboration agreement, following the FDA’s acceptance of the Prochieve NDA, Watson Pharma will have to make a $5 million milestone payment to Columbia Labs.

For Crinone, which is indicated for the treatment of infertility in women, Columbia Labs receives royalties on net sales made by Watson Pharma. Outside the US, Crinone is marketed by Merck KGaA ( MKGAF ) .

Watson Pharma had launched Crinone in 2010, along with ella and Trelstar. Ella is an emergency contraceptive which helps in preventing pregnancies for up to five days after unprotected intercourse, whereas Trelstar is marketed for the palliative treatment of advanced prostate cancer.

Moreover, Watson Pharma also gained approval for an oral contraceptive in December 2010. The product, which is licensed from Warner Chilcott plc ( WCRX - Analyst Report ) , is a chewable 25-microgram ethinyl estradiol product with a 24/4 dosing regimen.

We currently have a Zacks #2 Rank (short-term Buy rating) on Watson Pharma. We believe that the company’s cost saving initiative and new product launches, both branded and generic, will help drive growth.

In the long-term, we have a Neutral recommendation on the company.