Plan B Boosts Barr Branded Sales; Firm Teams With Teva On Generic Allegra

Barr Labs expects an increase in Plan B prescription sales to contribute to the firm's growing revenues for its proprietary product portfolio.

Plan B and the extended-regimen oral contraceptive Seasonale were two of three drugs cited by CFO William McKee as the main drivers behind growth of proprietary product sales for the quarter.

"Overall, we do expect revenue growth for our existing proprietary product portfolio in 2006, driven principally by higher sales of Seasonale, Plan B" and the hormone therapy Enjuvia , McKee said during a fourth-quarter and fiscal 2005 year-end earnings call Sept. 8.

Branded drug sales were $80 mil. in the fourth quarter, up 81% from $44 mil. in the prior-year period. The hormone therapy product Cenestin also contributed the increase, McKee stated.

Year-over-year, proprietary product sales saw a dramatic 91% increase to $279 mil., McKee added. As a whole, the "increasing contribution of proprietary products helped to drive overall margins to 70%, up from 51% a year ago," the firm said.

Publicity surrounding Barr's proposed Rx-to-OTC switch of Plan B is likely the main driver behind the drug's revenue growth, particularly because the application has been pending at FDA for more than two years. Meanwhile, seven states have made the product easier to purchase by allowing pharmacy sale without a doctor's visit.

The agency announced Aug. 26 it would again delay its decision on the proposed switch of the drug because of questions about whether a drug may be marketed Rx for one age group and OTC for another (¹ (Also see "FDA “Unable” To Decide On Plan B, Seeks Comment On Dual-Status Drugs" - Pink Sheet, 29 Aug, 2005.), p. 4). FDA initiated an advance notice of proposed rulemaking on the same day to collect public comment on dual-status drugs.

Barr intends to submit comments on the ANPR as part of its efforts to continue its pursuit of OTC availability.

"We're going to make our submission in response to that invitation and we're going to press our argument for having the product over-the-counter," CEO Bruce Downey said. "We think that's the appropriate place for the product, and we're going to continue to fight to make it happen."

Separately, Barr provided details of an agreement announced Sept. 6 that will allow Teva to obtain FDA approval for 30 mg, 60 mg and 180 mg fexofenadine tablets (Sanofi-Aventis' Allegra ).

Barr received approval for the tablets Aug. 31, but will waive its 180-day generic exclusivity under the announced agreement. Teva commenced the "at risk" launch Sept. 1 under its own ANDA and will be the sole distributor of generic Allegra during the 180-day exclusivity period.

In return for selectively waiving its exclusivity, "Barr will receive a negotiated percentage of the gross profit of Teva's product, both during and after the exclusivity period," the firm said.

Barr has refrained from launching generic Allegra capsules and Allegra-D 12-hour tablets - for which it received approval earlier in 2005 - due to pending patent litigation with Sanofi. Several Allegra patents remain in litigation and a trial is expected for 2006.

The agreement includes "risk sharing" provisions to defray the liability associated with the launch and "enables us to maximize the opportunity, while sharing the risk of ongoing litigation," Barr said.

Barr is in the process of calculating potential liability for accounting purposes, which could include a one-time charge this quarter.

"As a result of the risk-sharing nature of our agreement with Teva for our Allegra launch, we are evaluating now whether we have any potential liability" under accounting rules related to indemnifications, McKee said. "If we conclude that we have a liability, we will need to record a one-time, non-cash charge in the [first] quarter to reflect an estimate of that liability."

McKee emphasized that the amount of any liability charge would not mirror the reality of damages owed if the generic was found to infringe.

The potential liability figure "is not intended to have us record an estimate of the potential damages. It really has to do with the fact that there's this risk sharing arrangement and implied indemnification to Teva."

"The approach of calculating that particular liability goes into a lot of probabilities about the outcomes and so forth," McKee said. "It's a liability that in no way reflects what somebody could come up with as the potential damages coming out of the launch."

Barr reported fiscal year 2005 (ended June 30) net earnings of $215 mil. on revenues of $1.05 bil.