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Par Pharmaceutical Companies Inc. and Intellipharmaceutics International Inc. (IPCI - Snapshot Report) recently announced the expansion of their collaboration for the development and commercialization of additional strengths of their generic version of Focalin XR (dexmethylphenidate hydrochloride). The agreement covers only the US market.

The companies already have an agreement for the development and commercialization of 5, 10, 15 and 20 mg strengths of generic Focalin XR. According to the deal, Intellipharmaceutics is responsible for all development costs of generic Focalin XR, while Par Pharma is responsible for bioequivalence costs, API costs, scale-up/stability costs and marketing of the product. Par Pharma is also responsible for all litigation expenses.

Additionally, according to the expanded agreement, Par Pharma will make an upfront payment to Intellipharmaceutics and the latter is also entitled to receive a share of profits from the sales of the drug.

We note that Focalin XR, which is marketed for the treatment of attention-deficit hyperactivity disorder (ADHD), was licensed by Celgene Corporation (CELG - Analyst Report) to Novartis AG (NVS - Analyst Report). According to the agreement, Celgene granted Novartis the worldwide (excluding Canada) rights to develop and market Focalin XR. In return, Celgene received an upfront payment and is eligible to receive certain milestone payments.

The branded Focalin XR was approved by the US Food and Drug Administration (FDA) to be used as a treatment for ADHD in May 2005. In May 2007, Par Pharma and Intellipharmaceutics filed abbreviated new drug applications (ANDA) with the FDA seeking approval to market the generic versions of 5, 10, 15 and 20 mg doses of Focalin XR. Further, in December 2010, Intellipharmaceutics alone filed an ANDA with the FDA for the 30 mg strength of generic Focalin XR.

Celgene, Novartis, Elan Corporation plc , Par Pharma and Intellipharmaceutics have settled the patent litigation concerning the 5, 10, 15 and 20 mg doses of generic version of Focalin XR. The generic companies expect the FDA to approve these generic versions by the fourth quarter of 2012.

However, in March 2011, Elan filed a patent infringement lawsuit against Par Pharma and Intellipharmaceutics, while in April, Celgene and Novartis filed a patent infringement lawsuit against the generic companies for the 30 mg strength of generic Focalin XR.

We note that Novartis has licensed the 25 mg and 35 mg strengths of Focalin XR to Elan for development and commercialization.

We currently have a Neutral recommendation for all the afore-mentioned companies – Par Pharma, Intellipharmaceutics, Celgene, Novartis and Elan.

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