Staff Writer

Getting a stronger foothold in the cardiovascular therapeutic area, Kos Pharmaceuticals Inc. paid $104 million in cash to Biovail Corp. for U.S. sales and marketing rights to Cardizem LA.

The agreement also gives Cranbury, N.J.-based Kos full ownership of the cardiovascular products Teveten and Teveten HCT.

"The three new products added to our portfolio will not only enhance our near-term financial outlook," said Kos' president and CEO, Adrian Adams, in a conference call, "but also serve as an excellent bridge until our pipeline products emerge from development, the earliest of which is scheduled to reach market in 2007."

In addition, Kos will gain commercial rights to the combination product of Cardizem LA and enalapril, which is in formulation development. It also will hold the right of first negotiation to two other research and development projects in the cardiovascular and metabolic disease area.

"It's always been part of our strategic attempt to broaden our product portfolio and obviously to increase expectations for the future," Adams told BioWorld Today. "This, in essence, brings in three new products in the hypertension/angina area in which we're not involved in at the moment."

Biovail, of Toronto, decided to divest the Teveten products and enter the agreement for Cardizem LA as part of a commercialization restructuring plan for the U.S. market. Biovail will manufacture, supply and sell Cardizem LA to Kos for distribution at contracted prices, which will exceed 30 percent of Kos' net selling price.

"We book sales and we pay them a royalty on an ongoing basis," Adams said. "They obviously wanted to retain an interest in the product."

Biovail is reducing its global headcount of 2,200 employees by about 23 percent. Biovail's CEO Douglas Squires said that despite market-share gains, the Cardizem LA and Teveten product lines "could not justify the financial investment" that the company was making.

Of the 500 Biovail employees being laid off, 200 of them will be invited to work at Kos.

"We don't anticipate that all of them will accept," Adams said. "We expect to have around 180 to 185 accept, and about 150 will be sales people."

The remaining 30 to 35 would serve as district managers or head office support for the new sales force that will promote Cardizem LA and Teveten. Kos expects to add Biovail sales reps to its existing 500-person sales force, and together they will cover the marketing of up to six products.

Kos will pay Biovail to manufacture and supply the Cardizem LA/enalapril product, as well, and it will pay Marietta, Ga.-based Solvay Pharmaceuticals Inc. to continue to manufacture and supply the Teveten products.

The two Teveten products had sales of $18 million last year with prescriptions growing 25 percent over the previous year. Cardizem LA sales were about $54 million in 2004, a 105 percent increase from 2003.

"Obviously, these products are accretive and will add to both the top and bottom lines over the next couple of years," Adams said.

The transaction should increase Kos' revenue outlook for this year by 8 percent, to $710 million to $720 million, and its cash from operations by about 10 percent. The company announced its first-quarter results Tuesday, reporting $285 million in cash and marketable securities.

Teveten (eprosartan mesylate) was launched in 1998 by London-based GlaxoSmithKline plc (then SmithKline Beecham) and acquired by Biovail in 2002. It is an angiotensin II receptor blocker that lowers blood pressure by its effects on the renin-angiotensin-aldosterone system. Teveten HCT (eprosartan mesylate/hydrochlorothiazide) was launched in 2003 and combines eprosartan with a diuretic, providing large reductions in systolic blood pressure.

Launched in 2003, Cardizem LA (diltiazem hydrochloride) is a long-acting formulation of a calcium channel blocker used for hypertension and angina. It produces its antihypertensive effect by relaxing vascular smooth muscle and decreasing peripheral vascular resistance.

A new drug application for the Cardizem LA and enalapril product is expected to be submitted to the FDA during the first half of 2007. Biovail is responsible for development and approval of the product and Kos would make payments to Biovail upon the achievement of certain milestones.

Kos' marketed products include Niaspan and Advicor to treat cholesterol disorders, and Azmacort for asthma. The company's main strategy is to reformulate existing products with large markets to improve safety, efficacy or patient compliance.

Kos recently settled a Niaspan patent dispute with Barr Laboratories Inc., of Woodcliff Lake, N.J., permitting Barr to launch generic versions of Niaspan and Advicor. Now, with the Biovail agreement, Kos is well positioned for the future, Adams said.

"Overall, we believe it's a very nice arrangement for us, particularly in light of the resolution of the Barr litigation," he said. "The overhang that was on our stock has gone away."

Kos' stock (NASDAQ:KOSP) rose $4.27 Tuesday to close at $54.29.

Published  May 4, 2005