Mylan Inc. (MYL) received encouraging news when a federal district court granted its request to forge a settlement with Endo International plc (ENDP) regarding the latter’s acute migraine drug Frova (frovatriptan). As a result of the move by the federal district court, the decision it rendered in Jan 2014 in the patent infringement case becomes void.

We remind investors that in Jan 2014, the court upheld the validity of Endo’s patent (5,464,864) on Frova and ruled that it would be infringed by Mylan’s generic version of the treatment. The court while ruling in favor of Endo stated that Mylan cannot sell its generic version of Frova in the U.S. before the expiry of the former’s patent on the drug (scheduled on Nov 7, 2015) pending possible appeal by Mylan. The two companies had been entangled in a legal tussle on Frova since 2011 when Mylan filed an abbreviated new drug application (ANDA) with the U.S. Food and Drug Administration (:FDA) seeking to sell its generic version of the therapy. The application was subsequently challenged by Endo.

The latest decision allows the generic player to launch its generic version of Frova pursuant to the terms of the settlement, depending on final approval from the U.S. Food and Drug Administration. The development of Frova is a positive for Mylan’s generic unit, the principal growth engine of the company.

The company derives majority of its revenues from this segment. In 2013, the unit contributed 85% to its total revenues. The generic pipeline is also very strong at Mylan. Mylan stated in its press release that as of Apr 11, 2014, the company’s generic unit had 187 abbreviated new drug applications (ANDAs) pending approval from the FDA. The ANDAs represent annual sales worth $94.7 billion, according to data released by IMS Health. Mylan believes that 41 of these pending ANDAs are potential first-to-file opportunities representing annual branded sales worth $25.4 billion, for the 12 months ended Dec 31, 2013.

Mylan carries a Zacks Rank #2 (Buy). Stocks like Mallinckrodt (MNK) and Dr. Reddy's Laboratories Ltd. (RDY) are better-ranked with both carrying a Zacks Rank #1 (Strong Buy).

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