Adams Respiratory Therapeutics, Mutual Pharmaceuticals To Settle Patent Lawsuit

Adams Respiratory Therapeutics, Inc. (Nasdaq: ARxT - News) today announced that it has entered into a settlement agreement with Mutual Pharmaceutical Co. and United Research Laboratories, Inc., both wholly owned subsidiaries of Pharmaceutical Holdings Corp. (collectively Mutual). The agreement relates to the patent infringement lawsuit filed by Adams in the U.S. District Court for the Eastern District of Pennsylvania on Oct. 4, 2006, against Mutual for infringement of Adams’ U.S. Patent No. 6,372,252 (’252 patent), which expires in 2020.

The lawsuit was in response to Mutual’s notification that it filed an Abbreviated New Drug Application (ANDA) with the Food and Drug Administration (FDA) seeking approval to engage in the commercial manufacture, use or sale of generic versions of Adams’ 600 and 1200 mg single-ingredient guaifenesin extended-release tablets prior to the expiration of the ’252 patent. The ’252 patent is listed in the Orange Book with the FDA and covers Adams’ extended- release guaifenesin single-agent and combination products.

Patent Infringement Lawsuit Settled

Under the settlement agreement, Mutual admits that the Adams patent is valid and enforceable. Mutual also admits that certain single-agent and combination generic extended-release guaifenesin-based products infringe the ’252 patent. In addition, both parties have agreed to dismiss all patent infringement claims and all counterclaims in the lawsuit.

Product License Granted

Under the settlement agreement, Adams grants Mutual a non-exclusive, royalty-free license, with the right to grant a single sublicense - under its patents - to sell certain licensed products in the United States beginning no earlier than July 1, 2012, excluding certain events as described below.

Commenting on the agreements, president and CEO, Michael J. Valentino said, “I am extremely pleased with the outcome of this situation. We believe that this settlement agreement not only reinforces the strength of our patent portfolio protecting our oral solid, extended-release guaifenesin products, but it also eliminates the uncertainty around this situation and our ability to drive meaningful growth for these products well into the future.”

The settlement agreement covers certain 600 mg and 1200 mg single-agent and combination extended-release guaifenesin products.

-600 mg single-agent extended-release guaifenesin

- If Mutual obtains FDA approval to market certain 600 mg single-agent extended-release guaifenesin products, then Adams will grant Mutual a license to begin selling these products on or after July 1, 2012,
excluding the following events:

* If prior to that date a third party files an ANDA, certifies against and successfully challenges Adams’ patents, and gains final FDA approval for that product, then Mutual may, if it has final FDA approval for that product, commence selling its product 60 days prior to the date of first sale by the third party.

* If Mutual has not received FDA approval to market a 600 mg single-agent extended-release guaifenesin product at the time a third party commences selling an FDA-approved version, then Mutual may enter into
a supply agreement with Adams. Under the supply agreement, Mutual would purchase tablets at full cost plus a 10 percent royalty, based on Mutual’s net sales of the licensed product. Should Mutual elect
this option, Mutual’s sales could commence 90 days after the date of first sale by the third party.

1200 mg single-agent and 600/1200 mg combination extended-release guaifenesin products


- If Mutual obtains FDA approval to market these 1200 mg single-agent extended-release guaifenesin products or these 600/1200 mg combination extended-release products, then Adams will grant Mutual a license to begin selling these products if the following events occur:

* If a third party files an ANDA, certifies against and successfully challenges Adams’ patents, and gains final FDA approval for that product, then Mutual may commence selling its product 60 days prior to the date of first sale by the third party.

* If Mutual has not received FDA approval to market these products at the time a third party commences selling an FDA-approved version, then Mutual may enter into a supply agreement with Adams. Under the supply agreement, Mutual would purchase tablets at full cost plus a 10 percent royalty, based on Mutual’s net sales of the licensed product. Should Mutual elect this option, Mutual’s sales could commence 90 days after the date of first sale by the third party.

The settlement will be submitted for review by the Federal Trade Commission and U.S. Department of Justice. Adams has not received notification that a third party has filed an ANDA seeking to sell a generic version of any of its single-ingredient or combination extended-release guaifenesin products.