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Santarus Can Pursue Some Patent Claims Over Zegerid Copy

(Corrects sales figure in fourth paragraph of story published Sept. 4.)

Sept. 4 (Bloomberg) -- Santarus Inc. rose the most in two years after it won a U.S. appeals court ruling that lets it pursue efforts to block Par Pharmaceutical Cos. from selling generic versions of the heartburn medicine Zegerid until 2016.

The court reversed a lower court’s findings that aspects of two patents on the drug are invalid, and remanded the case for further proceedings. The U.S. Court of Appeals for the Federal Circuit also ruled today that three other Zegerid patents are invalid. The decision was posted on the court’s website.

Santarus rose 88 cents, or 14 percent, to $7.06 at 4 p.m. New York time in Nasdaq Stock Market trading of 2.2 million shares, more than four times the three-month daily average. It was the biggest one-day jump since Sept. 9, 2010. Par rose 5 cents to $49.85 in New York Stock Exchange composite trading.

Zegerid, which combines the compound omeprazole with antacids, generated $43.2 million in sales last year, more than a third of the $118.8 million in revenue for San Diego-based Santarus, said Martha Hough, a company spokeswoman. The company said it would seek an order halting further sales of Par’s generic product plus cash compensation for any lost sales.

“We believe Par has no meritorious basis to further dispute infringement or validity,” Santarus Chief Executive Officer Gerald Proehl said in a statement. “We plan to aggressively pursue all remedies available to us.”

The case’s two remaining patents, which expire in 2016, cover ways that the medicine, known as a proton pump inhibitor, can be absorbed into the bloodstream without being broken down by stomach acid. The formula allows the drug to be administered to patients who have difficulty swallowing capsules or tablets.

Licensing Agreement

Par, based in Woodcliff Lake, New Jersey, didn’t appeal the finding that it infringed the patents, according to the opinion. It focused its arguments on claims the patents were invalid and unenforceable.

Santarus stopped promoting Zegerid after losing the lower-court ruling in April 2010 and began selling an unbranded version of the medicine, according to its annual report. Zegerid also is sold over the counter in a lower-dosage form under a licensing agreement with Merck & Co.

The patents, including one of the two revived today, also are the subject of a case Santarus filed against Cadila Healthcare Ltd.’s Zydus unit that was put on hold pending the outcome of the Par appeal, and a suit filed against Dr. Reddy’s Laboratories Ltd. last month.

The case is Santarus Inc. v. Par Pharmaceutical Inc., 2010-1360 and 2010-1380, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Santarus Inc. v. Par Pharmaceutical Inc., 07cv551, U.S. District Court, District of Delaware (Wilmington).

To contact the reporter on this story: Susan Decker in Washington at

To contact the editor responsible for this story: Bernard Kohn at

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