GlaxoSmithKline Plc, which licenses the flu drug Relenza from Biota Holdings Ltd, paid the Australian company A$20 million (US$19.5 million) to settle a lawsuit.
Biota agreed to the payment, which is less than its legal costs, after the trial was postponed in May and lawyers said the delay would lead to increased costs and risks, the Melbourne-based company said yesterday in a statement.
“Our expectations were somewhere between A$50 million and A$100 million,” Scott Power, healthcare analyst at ABN Amro Morgans Ltd in Brisbane, said in a telephone interview yesterday. “Does that make this a bad outcome? No. It has removed uncertainty. They can now re-direct funds earmarked for legal costs to the development of their clinical program.”
Biota was seeking as much as A$704 million in lost income, saying Europe’s largest drugmaker had failed to adequately promote Relenza, also known as zanamivir. Royalties from the drug, which is the main competitor for Roche Holding AG’s Tamiflu, accounted for more than 70 percent of Biota’s A$56 million in sales last year.
Biota shares declined A$0.25, or 3.2 percent, to A$0.755, giving the company a market value of A$136.8 million. The stock has slumped almost 60 percent in the past year.
The company has incurred at least A$23.4 million in legal costs so far, based on its statements. Pursuing the case may have cost it A$20 million more, Power said.
He doesn’t own the shares, which he rates a “buy” and expects to reach A$1.26 within 12 months.
“We are pleased to have reached a settlement that is satisfactory for both companies and brings an end to this litigation,” Glaxo chief executive officer Andrew Witty said in yesterday’s statement.
The payment will be made on Aug. 18 and both companies will cover their own legal costs, Biota said.
“The focus will be on developing the Relenza franchise, particularly in the important market of pre-pandemic influenza risk management, an area of considerable concern to both governments and business,” Biota said in the statement.
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