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Prozac licensing deal OK'd
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April 13, 2000: 11:20 a.m. ET
Eli Lilly gets go-ahead to market new version of antidepression drug
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NEW YORK (CNNfn) - Eli Lilly and Co. said Thursday federal regulators have approved its pact to license a new version of the widely-prescribed antidepressant Prozac now under development.
Lilly shares gained about 6 percent on the news and after an analyst upgrade, while stock in its proposed licensing partner, Sepracor Inc. (SEPR: Research, Estimates), surged 24 percent.
If the new drug is approved, it could delay generic competition to Prozac for years. The patent on the existing Prozac expires in 2003. The lucrative drug had sales of about $2.6 billion last year.
Indianapolis-based Lilly said Thursday that the Federal Trade Commission has decided that the pending licensing agreement with Sepracor can proceed.
Lilly paid $90 million plus sales royalties to the Marlborough, Mass.-based company in 1998 for the right to sell a new version of the drug. The new medication, which still is undergoing clinical trials and is not expected to be introduced until 2002, is believed to have fewer side effects.
A generic drug maker, New York-based Barr Laboratories, has challenged the arrangement, contending that the deal marks an attempt by Lilly to undercut competition by cheaper generic versions of the drug. But Lilly counters that the new version is significantly different than the existing Prozac compound.
Lilly shares gained 4 to 69-1/8 in New York Stock Exchange composite trading. Merrill Lynch pharmaceutical analyst Steven Tighe upgraded the stock to "buy" from "long-term accumulate," saying that concern over the licensing pact "has been suppressing investor appetite for this stock."
Sepracor shares jumped 16-1/4 to 85 at 4 p.m. ET on the Nasdaq. 
-- staff and wire reports
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Eli Lilly and Co.
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