EVMS TO GET $19 MILLION FOR ITS BIRTH CONTROL PILL
Published: September 4, 2004
Section: BUSINESS, page D1
Source: BILL SIZEMORE THE VIRGINIAN-PILOT
© 2004- Landmark Communications Inc.
NORFOLK - Eastern Virginia Medical School will become $19 million richer Tuesday.


Barr Pharmaceuticals Inc. exercised its option Friday to make a one-time payment to EVMS in lieu of future royalties on the sale of Seasonale, an innovative birth control pill developed at the school. The "extended-cycle" contraceptive reduces the number of the user's menstrual periods from 13 to four per year.

The executive committee of EVMS' Board of Visitors agreed Friday to transfer ownership of the Seasonale patent to Barr in return for the $19 million buyout. The transfer of funds will occur Tuesday.

The payment is a welcome shot in the arm for a school that has struggled with budget shortfalls for the past three years.

"It's a great day," said Harry T. Lester, rector of the EVMS board.

Seasonale is the first commercial application of research done at the 31-year-old school.

Since the pill's launch last November, more than 260,000 prescriptions have been filled for it . Barr projects $100 million in sales in fiscal 2005.

"We anticipate continued strong growth for this exciting contraceptive option," Bruce L. Downey, Barr's chairman and chief executive officer, said in a statement. "By exercising our option to make this one-time royalty payment, we have satisfied all future royalty obligations to EVMS and provided them with a substantial return on the research conducted at their outstanding institution."

The buyout is a good deal for EVMS in light of several business risks that lie ahead for Seasonale, said Mark Babashanian, the school's vice president for administration and finance. A risk analysis by Babashanian determined that the buyout exceeds the net present value of EVMS' potential future royalties, which he estimated at $18.48 million.

"We believe it's clearly in our best interest," Babashanian said.

Barr has not disclosed any risk analysis calculations of its own.

In a teleconference with EVMS officials, Paul Bisaro, Barr's president and chief operating officer, said the Woodcliff Lake, N.J.-based company is facing patent challenges from competitors in the United States and Europe. If the patent is overturned, Seasonale could face generic competition as early as September 2006, Bisaro said. Even if the patent is upheld, the company will face steep legal bills defending it, he said.

By assuming sole ownership of the patent, Barr gains the ability to react more nimbly to the patent challenges, Bisaro said.

By giving up its patent rights, EVMS becomes better insulated against legal liability for the product, said William R. Van Buren III, the school's attorney.

Seasonale is the brainchild of Gary Hodgen, the former scientific director of EVMS' Jones Institute for Reproductive Medicine, who stepped down three years ago for health reasons.

As the inventor, Hodgen is entitled to $3.3 million of the buyout. Of the remainder, $7.3 million will go to recoup EVMS' investment; $6.1 million will be used to advance the growth and development of the department of obstetrics and gynecology, of which the Jones Institute is a part; and $2.3 million will go to EVMS as a whole.

n Reach Bill Sizemore at 446-2276 or bill.sizemore pilotonline.com.
Description of illustration(s):
Graphic
Sales
Since the launch of Seasonale in November, more than 260,000
prescrip-tions have been filled.