K-V Inks Deal With Hologic to Slash $95 Million Makena Claim
12:52p ET December 6, 2012 (Dow Jones)
K-V Inks Deal With Hologic to Slash $95 Million Makena Claim
By Joseph Checkler
K-V Pharmaceutical Co. (KVPBQ, KVPHQ) said it will pay Hologic Inc. (HOLX) $60 million to settle a dispute over Hologic's claims tied to K-V's flagship premature birth drug Makena, a key agreement that could help K-V exit Chapter 11 protection.
In a Wednesday filing with U.S. Bankruptcy Court in Manhattan, K-V said it will seek a bankruptcy loan that would help it pay off Hologic, which agreed to release liens related to Makena once it is paid. Hologic had previously claimed it was owed $95 million related to Makena.
"Among other benefits, the Settlement Agreement resolves expensive and time consuming litigation between the Debtors and the Hologic Parties," K-V said in its filing. The settlement, which requires court approval, allows K-V to retain its most prized asset, Makena, and "removes a significant impediment in the Debtors' path to emergence from chapter 11," K-V said.
A hearing on the settlement is set for Dec. 26, and K-V must make the payment to Hologic by Dec. 31, the filing said.
Back in September, Hologic tried to reacquire the rights to Makena, which K-V agreed to buy in 2008. Hologic, which has received more than $104 million in payments from K-V, said K-V's missteps and mismanagement had depleted the value of Makena, and it asked a judge to lift the automatic stay provision afforded to K-V by the Bankruptcy Code so it could fight for the Makena rights. This settlement would end that litigation.
K-V's bankruptcy, like its business before it filed for Chapter 11, centers on the success of Makena.
When the drug hit the market, K-V sold it for $1,500 per shot, a price that set off protests from detractors who said the drug was too costly. The Food and Drug Administration then decided not to take action against "compounder" companies making cheaper drugs usig the same active ingredient as Makena, which hurt the drug's sales. K-V eventually lowered the price.
Although the FDA clarified its statement about Makena in June, the company thought it didn't go far enough and sued. A judge threw out the initial lawsuit, though K-V appealed that decision in early November.
As part of its effort to halt the sales of drugs competing with Makena, K-V is considering suing some of the companies manufacturing those drugs.
K-V filed for Chapter 11 protection on Aug. 4, saying it couldn't afford a $45 million payment due to Hologic. The company also cited its ongoing FDA fight.
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