Sepracor Inc., will receive a $5 million upfront license fee from Schering-Plough Corp. to develop a purer, more potent form of Claritin, Schering-Plough's nonsedating antihistamine used by people with allergies.
The agreement is designed to allow Schering-Plough to extend the life of Claritin, the nation's best-selling antihistamine, after a key patent held by the firm expires in 4 1/2 years. The allergy drug is also the dominant player in the $3 billion worldwide antihistamine market, posting sales of $1.3 billion for the first nine months of this year. Last year Claritin's sales totaled $1.2 billion.
And while generic drug makers will scramble to develop a carbon copy of Claritin when the patent expires, Schering-Plough has turned to Sepracor, a Marlborough, Mass. company that specializes in developing purer, more potent forms of best-selling drugs coming off patent.
Monday's announcement prompted Sepracor shares to close at 41 1/2, its 52-week high, up 2 5/8 on Nasdaq. Schering-Plough shares closed at 61 1/4, down 11/16.
For Sepracor, the agreement is its third and potentially most lucrative project in the nonsedating antihistamine field, which the company is trying to corner. The first was with Hoechst Marion Roussel, for which Sepracor developed Allegra, which has replaced the original version, called Seldane, because it was considered by the US Food and Drug Administration to be safer. Sepracor is also developing a second antihistamine on its own called Norastemizole, which is similar to an existing drug from Johnson & Johnson called Hismanal.
Unlike Schering-Plough, Sepracor holds some newer patents covering the use of one of Claritin's key ingredients, called decarboethoxyloratadine, which expire in 2014. Sepracor also has patent filings for other DCL pharmaceutical formulations and methods of treatment.
Schering-Plough, based in Madison, N.J., holds one Claritin patent that expires in 2002 and another involving DCL that expires in 2004.
"We see development of the DCL product as representing a potentially valuable addition to our Claritin franchise," said Thomas C. Lauda, Schering-Plough executive vice president for global marketing.
Sepracor president Timothy Barberich said he anticipates the new version of Claritin could be on the market in as little as four years.
Under the agreement, Schering-Plough will be responsible for all costs of developing, manufacturing, and marketing the improved version of Claritin, with Sepracor receiving undisclosed royalties based on sales. Those royalties will be pure profit for Sepracor, noted several Wall Street analysts.
"We see the Schering DCL deal as being very positive for Sepracor," said Barbara Dau Hoffman, an analyst at Vector Securities Inc.
She estimated the royalties to Sepracor will rise from about $32 million in 2001, when the drug is expected to reach the market following FDA approval, to $101 million in 2003 and $245 million in 2005. Publication Date : 1997-12-09
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