Jazz Pharmaceuticals PLC (JAZZannounced that some of its subsidiaries settled an old patent lawsuit by entering into an agreement with Hikma Pharmaceuticals PLC related to Xyrem (sodium oxybate) oral solution. The 2002 approved drug is used to treat narcolepsy, a condition that causes severe daytime sleepiness, and to reduce cataplexy, a condition of sudden short attacks of muscle paralysis/weakness muscles that can occur in narcolepsy patients.

Jazz Gains on Potential Royalties

The longstanding litigation was pending since 2010, and was a result of Roxane Laboratories Inc., which later got acquired by Hikma, filing for an Abbreviated New Drug Application (ANDA) to the U.S. Food And Drug Administration (FDA) seeking approval to launch a generic version of Xyrem. In January, the FDA approved the generic version. (For more, see FDA Approves Generic of Jazz's Sleep Drug.)

In the recent settlement, Hikma and its subsidiary, West-Ward Pharmaceuticals Corp., have been granted the rights to market an authorized generic (AG) version of Xyrem in the U.S. under the Xyrem New Drug Application (NDA), commencing on January 1, 2023, or earlier based on certain conditions. The agreement provisions for an initial six-months term for the AG arrangement, and allows Hikma an option to extend it for another 4.5 years. At the end of the AG term, Hikma will have the right to sell its generic product.

In return, Dublin-based Jazz will be eligible to receive royalty payments based on the net sales of the Xyrem AG product. The deal also provisions for an increase in the royalty rate during the initial AG term based on increased AG sales. The royalty rate will increase substantially should AG term gets extended beyond a year.

The generic will be marketed through Jazz’s Xyrem Risk Evaluation and Mitigation Strategy (REMS) program, which aims to mitigate the risks of serious adverse outcomes resulting from inappropriate prescribing, misuse, abuse of Xyrem. Jazz will also receive payments for AG product supply and will be reimbursed a part of cost linked to operations and distribution.

A separate patent litigation against four other companies looking to launch Xyrem generic is pending in the U.S. District Court for the District of New Jersey.

Following the update, Jazz Pharmaceuticals stock jumped more than 6% during pre-market hours on Thursday. (See also, Jazz Pharma Gets FDA Warning for UK Plant.)