Kos and Barr Sign Agreements To Resolve Patent Litigation

    April 13, 2005

Kos Pharmaceuticals and Barr Pharmaceuticals have signed Co-Promotion, Licensing and Manufacturing, and Settlement and License Agreements relating to the resolution of the patent litigation involving Kos’ Niaspan products.

The United States District Court for the Southern District of New York entered into a Consent Dismissal ending the pending litigation between the two companies. These arrangements have been established to provide benefits to millions of female patients who have multiple lipid disorders and are candidates for Kos’ niacin-based pharmaceutical cholesterol products.

Co-Promotion Agreement

The Co-Promotion Agreement provides that Kos and Duramed Pharmaceuticals, a subsidiary of Barr Pharmaceuticals, will co-promote the current Niaspan and Advicor products, as well as future dosage formulations, strengths or modified versions of those products (“the Products”), to obstetricians, gynecologists and other practitioners with a focus on women’s healthcare in the United States using a Duramed specialty sales force. Under the terms of the seven-year agreement (with renewal rights), Kos will train a 40-person Duramed specialty sales force, which will begin promoting the Products in mid- 2005. In consideration of the Co-Promotion, Kos will pay Duramed royalties based on quarterly and yearly net sales of the Products, subject to certain maximum sales levels. The Co-Promotion would address a new discrete population of obstetricians, gynecologists and other practitioners with a focus on women’s healthcare who have not previously been detailed on Kos’ cholesterol products. Kos’ cholesterol products could directly serve the growing need to treat the risks of cardiovascular disease in the 28 million women identified by the American Heart Association (AHA) who require HDL-C (the “good” cholesterol) raising therapy.

In February 2004, the AHA raised its guidelines for HDL-C in women from 40 mg/dl to 50 mg/dl. The new guidelines also recommended that women maintain triglycerides levels below 150 mg/dl, a 25% change from past guidelines. These new guidelines essentially tripled the number of women who are candidates for Niaspan and Advicor therapy to about 28 million.

At the same time, a second study published in Circulation found that nearly two-thirds of women at highest risk for a heart attack receive no treatment at all, despite having levels of “good” and “bad” cholesterol that endanger them. Only 7 percent of women had lipid levels considered optimal by the AHA women’s guidelines issued last year (LDL-C of less than 100mg/dL and HDL-C above 50 mg/dL).

Settlement and License Agreement

The Settlement and License Agreement permits Barr Laboratories to launch generic versions of Niaspan and Advicor, as well as future dosage formulations, strengths or modified versions of the Products, under terms of an exclusive license commencing on September 20, 2013, approximately four years earlier than the last-to-expire Kos patent. Upon launch, Barr would pay Kos a royalty equal to a portion of profits generated from the sales of generic versions of the Products. As part of the settlement, Barr admits that Kos’ patents are valid and enforceable and that Barr infringes the Kos patents.

License and Manufacturing Agreement

In a separate License and Manufacturing Agreement, Barr Laboratories has agreed to stand ready to supply Kos Life Sciences, Inc. quantities of Niaspan 500 mg, 750 mg and 1000 mg Extended-Release Niacin Tablets and Advicor 500 mg/20 mg, 750 mg/20 mg and 1000 mg/20 mg Extended Release Niacin/Lovastatin Tablets, under or pursuant to the approval of Barr’s Abbreviated New Drug Applications (ANDAs). Under the terms of the License and Manufacturing Agreement, Barr will receive an initial license fee and quarterly payments to stand ready to meet Kos’ manufacturing requirements. In addition, if Kos engages Barr to manufacture these products, Kos will purchase such products at an agreed upon supply price.

“We believe the agreements announced today provide an equitable way to resolve our Niaspan patent litigation that creates a benefit for consumers, as well as Barr’s shareholders,” said Bruce L. Downey, Barr’s Chairman and Chief Executive Officer. “We believe these agreements open the door for significant opportunities for both Barr and Kos, including an additional Duramed sales force that can be utilized to promote Kos’ products, Duramed’s products, and other proprietary products. In addition, the agreements provide the certainty of generic entry four years before the patents expire, or potentially earlier in certain circumstances.”

“This agreement with Barr not only benefits both companies, but most importantly, it broadens the utility of our niacin-based pharmaceutical cholesterol products to a wider female patient population, thereby saving more lives,” said Adrian Adams, President and CEO of Kos. “Kos has spent significant time and money developing these products, conducting studies, securing and defending intellectual property and expanding medical education on the need to treat a broad range of lipid parameters. Now, not only will we be able to continue to market and grow our cholesterol franchise, but we will also be able to leverage Barr’s excellent relationships and competencies with the obstetric/gynecology community that expands our products’ reach into an entirely new market segment. This partnership will proliferate the medical education on the unique benefits of Niaspan and Advicor in reducing the risk of cardiovascular disease in women, a uniquely underserved population. Lastly, it provides us with additional manufacturing capabilities if needed, which we were already exploring.”

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