Exhibit 99.1
For Immediate Release: Company Contact:
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April 8, 2004 Nancy C. Broadbent
Chief Financial Officer
(215) 579-7388
Investor Relations:
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Lisa M. Wilson
In-Site Communications
(212) 759-3929
CollaGenex Pharmaceuticals Settles Mutual Pharmaceuticals
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Patent Infringement Case
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CollaGenex and Mutual enter into License and Supply
Agreement for branded version of Periostat
Newtown, Pa., April 8, 2004 - CollaGenex Pharmaceuticals, Inc. (Nasdaq: CGPI)
today announced that it has settled all pending litigation between CollaGenex
and United Research Laboratories, Inc./Mutual Pharmaceutical Company, Inc.
("Mutual").
In connection with the settlement, CollaGenex and Mutual entered into a
License and Supply Agreement pursuant to which Mutual received a license to sell
a branded version of Periostat(R). Under this agreement, CollaGenex will be the
sole supplier of this product to Mutual, subject to certain conditions, at
prices below CollaGenex's average manufacturer's price through May 2007 or the
earlier termination of such supply arrangements due to certain circumstances. In
addition, CollaGenex agreed not to grant any license to sell Periostat in
generic trade dress to any third party during the supply term.
The arrangement with Mutual was contingent upon, among other things, the
formal notice from First DataBank, Inc. that Mutual's product has been listed on
First DataBank's customer databases and priced as a branded product. This formal
notice occurred this afternoon consistent with First DataBank's weekly standard
practice of providing such formal notice only on Thursday afternoons Eastern
Time. First DataBank is a leading provider of comprehensive drug information,
including drug pricing, to healthcare professionals and pharmacists.
CollaGenex sued Mutual in the United States District Court for the Eastern
District of New York, alleging that Mutual infringed CollaGenex's patents for
Periostat for the treatment of adult periodontitis. CollaGenex's complaint also
alleged that Mutual infringed CollaGenex's patent rights by submitting an
Abbreviated New Drug Application ("ANDA") with the Food and Drug Administration
("FDA"), seeking FDA approval to market a generic tablet version of Periostat.
In a separate action in the United States District Court for the District
of Columbia, CollaGenex sought and, on July 22, 2003, was granted a preliminary
injunction preventing the FDA from approving generic versions of Periostat,
including Mutual's version. Mutual intervened in that case.
In July 2003, Mutual commenced an action against CollaGenex in the United
States District Court for the Eastern District of Pennsylvania. Mutual alleged
that CollaGenex had engaged in an effort to monopolize the market for low-dose
doxycycline products.
In the settlement, Mutual agreed and confessed to judgment that
CollaGenex's Periostat patents are valid and would be infringed by the
commercial manufacture, use, sale, importation or offer for sale of the generic
version of Periostat for which Mutual submitted its ANDA. Mutual consented to a
judgment enjoining Mutual and any party acting in concert with Mutual from
infringing CollaGenex's patents by making and selling a generic version of
Periostat until CollaGenex's patents expire or are declared invalid or
unenforceable by a court of competent jurisdiction, or until Mutual is granted a
license under the patents, which will occur under the License and Supply
Agreement if a third-party, generic version of Periostat is launched and remains
on the market for a certain period of time or CollaGenex materially breaches its
obligations under the agreement. Finally, Mutual agreed to withdraw from the FDA
case in the District of Columbia.
CollaGenex agreed to pay to Mutual the amount of $2,000,000, which
represents a portion of the anticipated fees and expenses that CollaGenex will
save as a result of the settlement of the pending actions with Mutual. This
charge will be recorded in the first quarter of 2004. Under CollaGenex's license
agreement with the State
University of New York ("SUNY") covering Periostat, CollaGenex is entitled to
deduct costs incurred to defend its patents, including this payment, from
current and future royalties due SUNY on net sales of Periostat and Mutual's
branded version of Periostat.
"This settlement is highly favorable to CollaGenex and resolves the
inherent risk and uncertainty involved with outstanding litigation," said Colin
Stewart, president and chief executive officer of CollaGenex. "Most importantly,
it enables us to move forward to capitalize on the significant opportunities to
continue to grow and build awareness of the Periostat franchise, as well as
develop the new MR version and other proprietary products in our pipeline."
"Nevertheless, we remain committed to vigorously enforcing our patent
rights against any party that seeks to infringe those rights, and we will
continue to pursue any unauthorized use of our intellectual property," concluded
Mr. Stewart.
Nancy C. Broadbent, chief financial officer of CollaGenex, added, "During
the second quarter of 2004, we will be shipping to Mutual an initial stocking
order of product, including a one-time promotional allowance, which we expect
will affect our quarterly sales patterns and profitability for a portion of
2004. Thereafter, we anticipate that our reported sales will be primarily driven
by end user demand, and we expect to generate gross margins in the range of 86
to 88% of our total net sales of Periostat, including Mutual's branded version."
Conference Call
CollaGenex will hold a conference call on Monday, April 12, 2004, at 8:30
A.M. Eastern Time to discuss the Company's settlement with Mutual. Investors and
other interested parties can access the conference call by dialing 800-273-1254
in the U.S. or 706-679-8592 internationally, or via a live Internet broadcast on
the Company's website at www.collagenex.com.
For those who cannot listen to the live broadcast, a replay will be
available shortly after the call at the aforementioned URL for 90 days. A
dial-in replay of the call will be available until 11:59 p.m. on April 26, 2004
by dialing 800-642-1687 or 706-645-9291 internationally and entering access code
6683886.
CollaGenex Pharmaceuticals, Inc. is a specialty pharmaceutical company
focused on providing innovative medical therapies to the dental and dermatology
markets. Currently, the Company's 115-person professional pharmaceutical sales
force markets Periostat, which is indicated as an adjunct to scaling and root
planing for the treatment of adult periodontitis. Periostat is the first and
only pharmaceutical to treat periodontal disease by inhibiting the enzymes that
destroy periodontal support tissues, and by enhancing bone protein synthesis.
The sales force also promotes Atridox(R), Atrisorb FreeFlow(R) and Atrisorb-D(R)
FreeFlow, Atrix Laboratories Inc.'s products for the treatment of adult
periodontitis, to the dental market, and Pandel(R), a prescription topical
corticosteriod licensed from Altana, Inc., to the dermatology market.
Research has shown that certain unique properties of the tetracyclines
discovered during the development of Periostat may be applicable to other
diseases involving inflammation and/or destruction of the body's connective
tissues, including acne, rosacea, meibomianitis and cancer metastases, among
others. CollaGenex is further evaluating Periostat, as well as the new IMPACS(R)
compounds, to assess whether they are safe and effective in these applications.
In addition, CollaGenex has licensed the Restoraderm(TM) technology, a unique,
proprietary dermal drug delivery system, in order to develop a range of topical
dermatological products with enhanced pharmacologic and cosmetic properties.
To receive additional information on the Company, please visit our website
at WWW.COLLAGENEX.COM which does not form part of this press release.
This press release contains forward-looking statements within the meaning
of Section 21E of the Securities and Exchange Act of 1934, as amended. Investors
are cautioned that forward-looking statements involve risks and uncertainties,
which may affect the Company's business and prospects. The Company's business of
selling, marketing and developing pharmaceutical products is subject to a number
of significant risks, including risks relating to the implementation of the
Company's sales and marketing plans for Periostat and other products that the
Company markets,
risks relating to the Company's supply arrangement with Mutual, risks that the
FDA will approve generic products that will compete with and limit the market
for Periostat, risks inherent in research and development activities, risks
associated with conducting business in a highly regulated environment and
uncertainty relating to clinical trials of products under development, all as
discussed in the Company's periodic filings with the U.S. Securities and
Exchange Commission.
Periostat(R) and IMPACS(R) are registered trademarks, and RestoradermTM is a
trademark, of CollaGenex Pharmaceuticals, Inc.
All other trade names, trademarks or service marks are the property of their
respective owners and are not the property of CollaGenex Pharmaceuticals, Inc.
or any of our subsidiaries.
Pandel(R) is a trademark of Taisho Pharmaceuticals.
Atridox(R), Atrisorb(R) and Atrisorb-D(R) are trademarks of Atrix Laboratories,
Inc.