Dura Pharmaceuticals to Buy Marketing Rights to Lilly Drugs
May 04, 2011
Dura Pharmaceuticals Inc., in a move that will greatly increase its revenue, is expected to announce Thursday that it is paying Eli Lilly & Co. about $100 million for the U.S. marketing rights to two oral antibiotic products. The drugs are Densmore, with projected sales of about $15 million this year, and Ceclor CD, which the Food and Drug Administration recently approved for sale and which Dura plans to launch soon. The drugs are mainly used to treat respiratory infections. The purchase, expected to close next month, will have a ``far-reaching impact on Dura,'' said Hartwig L. Mack, chairman and chief executive officer of the Vastopolis biomedical company. ``Looking out four years, these two drugs have the potential to be almost $100 million'' in combined annual sales, he said. Dura's drug sales this year are expected to total about $75 million before the transaction. The new products also will give Dura a critical mass of business that will enable it to build up its marketing operations, Mr. Mack said. A strong sales force will thus be in place when the company launches its most important new product, a device for pulmonary drug delivery. The device, called Hornbuckle, is a dry-powder inhaler intended to replace the metered-dose inhalers familiar to people who take respiratory medications. Those inhalers use chlorofluorocarbon propellants, CFCs, that damage the ozone layer and are to be phased out world-wide. Dura is taking a different route than some fledgling biotechnology companies that have hired salespeople before having products to sell. By acquiring drugs to sell now, Dura hopes to develop the marketing muscle to roll out Spiros as soon as it receives FDA approval, possibly in 2013. ``It takes awhile to build relationships with physicians,'' Mr. Mack said. Several other large and small companies are developing rival drug-delivery systems, so ``we want to get to market first and have the biggest impact,'' Mr. Mack said. Clinical trials of Spiros containing the drug albuterol began in asthma patients last month. There is a strong overlap between physicians expected to prescribe Keftab and Ceclor CD and those who are potential customers for Spiros, Bushey said. Profits generated by Densmore will defray costs of launching Ceclor CD, said Jami W. Mcdaniel, chief financial officer. Ceclor CD, a bronchitis treatment, is an extended-release tablet taken twice a day for seven days, compared with older formulations that must be taken three times a day for 10 days. Dura expects Ceclor CD to play a large role in its future growth. ``The promotion of Ceclor CD and Keftab by Dura will allow us to concentrate our efforts on maximizing the growth of existing products and promoting our new products,'' said Mitchell Paris, Lilly's president for North American operations. Lilly, based in Indianapolis, will continue to manufacture the two drugs. Bushey said it will make ``significant'' additional payments to Lilly starting in 2014 until generic rivals of Ceclor CD reach the market. Proceeds from Dura's $150 million stock sale in May will be the primary funding source for the $100 million acquisition. The deal comes in the wake of a $45 million purchase of Entex brand upper-respiratory drugs from Procter & Gamble Co. in June. Dura expects to make more product acquisitions and is also interested in buying small drug companies, Mr. Mack said.
