Forest settles Alzheimer's drug patent suits

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Forest Laboratories Inc said it and Germany's Merz Pharma reached settlement agreements for all patent litigation over their Namenda Alzheimer's drug that will keep cheaper generic versions of the medicine off the US market until January 2015.

The announcement that removes uncertainty over one of Forest's most important and still-growing products boosted the company's shares by more that 2%.

"To the extent that anyone in the investment community was worried about an earlier-than-forecast launch of generic Namenda, a low probability risk is now removed from the equation," said Summer Street Research analyst Jon Stephenson.

"The stock is extremely inexpensive, so removing even a low probability risk factor has a meaningful impact on the stock," Stephenson added.

Forest said Thursday it and privately held Merz settled with all 10 defendants in patent infringement litigation related to Namenda, which is known generically as memantine. The settlements are subject to review by the US Federal Trade Commission, Forest said.

Forest had filed patent infringement lawsuits against Mylan Inc, Teva Pharmaceutical Industries Ltd, Watson Pharmaceuticals Inc, India's Dr Reddy's Laboratories Ltd and a handful of other generic drugmakers.

Under the settlement agreements, Forest and Merz will provide licenses to the 10 companies that will allow them to begin selling generic Namenda three months prior to expiration of the disputed US patent.

In the most recent quarter, Forest reported worldwide Namenda sales of USD 307.8 million, an increase of 18.7%.

Mylan, citing IMH Health data, said Namenda has annual US sales of about USD 1.2 billion.

Forest shares were up 67 cents, or 2.4%, at USD 28.54 on the New York Stock Exchange.