Mylan Inks Two Separate Agreements - Analyst Blog

Mylan Inc. MYL entered into two separate agreements with Prosonix and Actavis ACT. The first deal is a global licensing agreement with Prosonix for the latter's PSX1001 and PSX1050. Both candidates are being developed as generic versions of GlaxoSmithKline's GSK Flixotide and Flovent.

Flixotide and Flovent are approved for the treatment of asthma and had global brand sales of around $1.3 billion in 2013 as per IMS Health. As per the terms of the agreement, Mylan will gain marketing rights for PSX1001 and PSX1050 in the U.S., Canada, Australia, New Zealand, India, Japan, the EU, Iceland, Liechtenstein, Norway, Switzerland, Turkey, Russian Federation and the Commonwealth of Independent States.

Meanwhile, Prosonix will file for PSX1001 in the EU and hold the marketing rights of the candidate in certain areas. Prosonix intends to file the first regulatory application in the EU for PSX1001 later in the year.

Mylan's deal with Actavis is a settlement and license agreement regarding its Abbreviated New Drug Application ANDA for its generic version of Actavis' Generess Fe. As per the terms of the agreement, Mylan can start selling its generic version in the U.S. Apr 1, 2015 onwards.

The date of launch may be earlier under certain conditions and also depends on the final approval in the U.S. Generess Fe Tablets, indicated for the prevention of pregnancy, registered U.S. sales of approximately $81.83 million last year as per IMS Health.

Mylan will also be granted permission to launch an authorized generic version of Actavis' product Oct 1, 2015 onwards. Moreover, all pending litigation between the companies will be dismissed.

Apart from the agreement-related news, Mylan launched its generic version of Sunovion Pharmaceuticals Inc.'s Lunesta (eszopiclone tablets -- 1, 2 and 3 mg). Lunesta, approved for the treatment of insomnia, generated U.S. sales of approximately $851.8 million in 2013 as per IMS Health.

We note that Mylan derives a major part of its revenues from the generic segment. In 2013, the segment contributed 85% to total revenues. The company's generic pipeline is also very strong. Mylan's generic unit currently has 187 ANDAs pending approval from the FDA. The ANDAs represent annual sales worth $94.9 billion, according to data released by IMS Health. The company believes that 42 of these pending ANDAs are potential first-to-file opportunities representing annual branded sales worth $25.4 billion, for 2013. We expect the generic segment will continue to drive growth at the company.  

Mylan carries a Zacks Rank #2 (Buy). Dr. Reddy's Laboratories Ltd. RDY, with the same Zacks Rank, is also worth considering.