Mylan remains committed to expanding its brand business despite its failure to acquire King.

The company will continue to follow a strategy of growing shareholder value through a "strong balance between external activities and internal capabilities," which includes exploring other acquisition opportunities, CEO Robert Coury said during a March 10 investor call.

"I think that you've seen that we've begun at least to head down the path and look for opportunities," Coury said. "I would not rule out, however, any opportunities."

Mylan and King announced the termination of their proposed merger on Feb. 27. The companies failed to agree on renegotiated terms for a deal following King's restatement of its financial results dating back to 2002 (¹ Also see "Mylan's Pursuit Of King Ends; King Says It's Ready To Go It Alone" - Pink Sheet, 28 February, 2005.).

"It has been a long-standing strategy at Mylan to build a brand business," Coury told investors. "Shortly after I became CEO in 2002, I began to focus on our brand segment, which was, and still is, in need of improvement."

"We determined that accelerating our brand strategy by expanding our existing brand platform to establish what we call a true brand franchise would deliver a higher level of growth for shareholders, provide additional options for the commercialization of one of our key assets, nebivolol, and reduce the volatility inherent in the generics business."

"Pursuing the acquisition of King would have gone a long way to fulfilling that objective," he said.

"However, King was not the only option available to Mylan," Coury added.

Mylan intended to leverage King's sales force, which co-promotes the ACE inhibitor Altace with Wyeth, in the launch of nebivolol, a beta blocker (² Also see "Mylan To Pay $4 Bil. For King Ahead Of Launch Of Beta Blocker Nebivolol" - Pink Sheet, 26 July, 2004.).

FDA recently extended the user fee deadline for nebivolol by three months, to May 31, following Mylan's submission of additional data analysis (³ Also see "Mylan's Nebivolol NDA User Fee Date Extended To May 31" - Pink Sheet, 25 February, 2005.).

Mylan is not yet discussing whether it will launch and market nebivolol on its own or seek a partner for the cardiovascular agent.

The company licensed U.S. rights for nebivolol from Johnson & Johnson's Janssen division in April 2001.

Under that agreement, J&J has the "right to consent" to any partner selected by Mylan for nebivolol. However, such consent cannot be "unreasonably withheld" and does not limit who Mylan can talk to about partnership opportunities for the drug, Coury said.

"We can go talk to anybody we want and in the contract J&J has the right to consent," he said.

"We have a very strong relationship with J&J on this product," Coury told investors. "They are working very closely with us throughout the whole process and I think that...they are just as excited as we are about the prosecution of this compound."

Mylan continues to view nebivolol as significant driver of future growth.

"Regardless of the marketing options we choose" for nebivolol, "we are confident that our fiscal 2005 earnings per share will establish a new earnings base to grow upon as we head into fiscal 2006," Coury said. "We look forward to delivering earnings guidance for fiscal year 2006 once we determine which option for nebivolol we are going to undertake."

For fiscal 2005 (ending March 31), Mylan expects earnings per share in the "high end" of the company's previously estimated range of 75¢-80¢, Coury said.

However, the EPS estimate does not include costs related to the termination of the King acquisition, and the guidance assumes no new entrants in the market for generic Duragesic (fentanyl transdermal) by the end of March.

Mylan launched its Duragesic generic on Jan. 28; Sandoz is also on the market with an "authorized" generic (⁴ Also see "Mylan Encounters "Irrational Pricing" In Duragesic Generics Market" - Pink Sheet, 3 February, 2005.)

- Sue Sutter

Mylan Reaffirms Commitment To Brand Business Growth Despite King Setback

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