Jordanian drugmaker Hikma Pharmaceuticals (LSE: HIK) has reached a settlement with Jazz Pharmaceuticals (Nasdaq: JAZZ) that resolves patent litigation related to the Ireland-based company’s Xyrem (sodium oxybate) oral solution, 500mg/mL product.
Jazz will grant Hikma and its subsidiary, West-Ward Pharmaceuticals, the right to sell an authorized generic (AG) of Xyrem in the US market from January 1, 2023, or earlier under certain circumstances.
Used to treat cataplexy (sudden loss of muscle strength) and reduce daytime sleepiness in patients with narcolepsy, Xyrem net sales for 2016 earned Jazz $1.11 billion, according to the company’s annual report.
The AG product will be marketed through the Xyrem Risk Evaluation and Mitigation Strategy (REMS) program. The initial term of the AG arrangement is six months and Hikma has the option to extend this for up to a total of five years.
Jazz has also granted Hikma a license to market generic sodium oxybate pursuant to its Abbreviated New Drug Application (ANDA) at the end of the AG term.
Hikma will pay Jazz a royalty on net sales of the AG product, but will initially retain a meaningful percentage of net sales.
Jazz will also be paid for the supply of the AG product and reimbursed for a portion of the service costs associated with the operation of the Xyrem REMS and distribution of the AG.
The royalty rate paid to Jazz will increase should the AG term be extended beyond one year. Specific financial and other terms related to the settlement agreement have not been disclosed.
News of the deal came late on Wednesday and Jazz’s share price jumped by 3% in pre-market trading on Thursday to $145.
Hikma, through its US subsidiary, Roxane Laboratories, was the first ANDA applicant to submit a substantially complete ANDA with Paragraph IV certification for sodium oxybate oral solution, 500 mg/mL, and therefore is eligible for 180 days of generic drug exclusivity.
Mike Raya, chief executive of West-Ward said, “We are very pleased to have reached an agreement with Jazz with terms that are favorable for both parties. Sodium oxybate is an exciting product in our pipeline and supports our strategy of developing a differentiated product portfolio to drive sustainable growth for our US business.”