Warner Chilcott plc (WCRX) recently announced that the US Food and Drug Administration (“FDA”) extended the review period of the second generation version of its osteoporosis treatment Actonel by three months. The Prescription Drug User Fee Act date is now set for October 24, 2010. The regulatory body said that it needs more time to review the additional data on the candidate, submitted by the company on the FDA’s request.
 
Actonel is marketed worldwide as a treatment of osteoporosis. The drug lost patent exclusivity in Canada in the first quarter of 2010 and will lose exclusivity in Europe in December this year. In the U.S., the drug has pediatric exclusivity until 2014 and hence is not likely to face generic competition in the US before 2014. Warner Chilcott is looking to switch users to the next generation version of Actonel before generic Actonel hits the US market in 2014. The timely approval and launch of the next generation Actonel could help mitigate the impact of genericization of the currently available version.
 
Actonel became a part of Warner Chilcott’s product portfolio through its October 2009 acquisition of Procter & Gamble Company‘s (PG) global branded prescription pharmaceutical business.  The acquisition of this business added Actonel as well as Asacol (ulcerative colitis) to Warner Chilcott’s portfolio of products.
 
Warner Chilcott has a development agreement with Sanofi-Aventis (SNY) for Actonel. The agreement was amended earlier this year in April. As per the terms of the amended agreement, Warner Chilcott is responsible for all costs associated with the research and development, promotion and marketing of Actonel in the US and Puerto Rico. Earlier, these costs were shared by both the companies.
 
Following the amendment, the fixed percentage collaboration payment due from Warner Chilcott on net sales of Actonel (generated in the US and Puerto Rico) to Sanofi-Aventis has been reduced. This agreement is set to expire on January 1, 2015.
 
We currently have a Neutral recommendation on Warner Chilcott, which is supported by the Zacks Rank #3 (Hold). Although the company will be facing a number of patent expiries in the coming years (including Actonel in December 2010 in Europe; and in 2014 in the U.S., Doryx in mid 2011, and Asacol in 2013), we believe Warner Chilcott’s diversified product base will help withstand the generic threat.
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