Mylan, Forest Sign Licensing Deal

Forest will get the rights to the blood pressure drug nebivolol.
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Mylan Laboratories

(MYL) - Get Report

said late Wednesday that it will license nebivolol, an experimental blood pressure drug, to

Forest Laboratories

(FRX)

.

In return for marketing rights for nebivolol in the U.S. and Canada, Forest will make an upfront payment of $75 million, and will pay Mylan royalties based on future sales. Forest also will assume all development of the drug, and will pay for sales and marketing expenses. Mylan has the option to co-promote the drug in the future.

For Mylan, nebivolol was seen as the foundation for its attempt to diversify with higher-margin, brand-name drugs. Mylan had a handful of small, patent-protected products, but it believed nebivolol would propel its brand-name business.

Nebivolol was the main reason why Mylan tried to acquire

King Pharmaceuticals

(KG)

in July 2004. King had a big sales force with experience in selling blood pressure drugs, but the deal was

cancelled last February after the companies couldn't agree on a revised purchase price.

By mid-2005, Mylan had

changed its strategy, deciding to sell its brand-name products and to license nebivolol to someone else.

The agreement with Forest sent Mylan's shares up $1.65, or 8%, to $22.15 in after-hours trading Wednesday.

In May, Mylan received conditional approval from the Food and Drug Administration for nebivolol as a treatment for high blood pressure, but final approval is contingent on satisfying certain additional requirements.

"Mylan has completed a pre-clinical study designed to address certain questions posed by the FDA and is working towards submitting the results and other information to the FDA for their review," the companies said Wednesday. Mylan also plans to submit a separate application to the FDA during the second half of the year for approval of nebivolol as a congestive heart failure treatment.

Mylan received a license to the U.S. and Canadian rights to nebivolol in 2001 from

Janssen Pharmaceutical

, a unit of

Johnson & Johnson.

(JNJ) - Get Report

. Janssen consented to the sublicense to Forest, Mylan said.