UPDATE 2-Biovail, Watson reach pact on generic Cardizem

(In U.S. dollars. Adds background, analyst comments)

By Scott Anderson

TORONTO Dec 4 (Reuters) - Biovail Corp BVF.TO BVF.N managed to stave off another challenge to its patents after it said on Tuesday it reached an agreement with Watson Pharmaceuticals Inc (WPI.N) that will delay a generic version of Biovail's Cardizem LA heart drug until April 1, 2009.

Biovail Laboratories International SRL will receive a royalty from sales of Watson's version of the drug -- a calcium channel blocker used to treat hypertension and angina -- which won't be marketed or sold until 2009.

In return, Watson will get the exclusive license to Biovail's U.S. patents covering Cardizem.

"Biovail's settlement with Watson eliminates the uncertainty and expense associated with the patent-infringement litigation ... it allows for the launch of a generic formulation well before the expiry of the patents protecting Cardizem LA, while providing Biovail with an economic interest in such launch," Biovail spokesman Nelson Isabel said.

Biovail refused to provide financial details of the agreement.

The settlement is subject to court approval, and is expected to be submitted shortly to the U.S. assistant attorney general in charge of the antitrust division of the Department of Justice and the Federal Trade Commission.

The pact also ends patent litigation in U.S. courts.

Biovail manufactures and supplies Cardizem to Kos Pharmaceuticals, a division of Abbott Laboratories (ABT.N) at determined prices that are more than 30 percent of their net selling prices. Cardizem generated revenue of $56.5 million in 2006, down from $62.5 million in 2005.

The company launched the Cardizem line in April 2003 and stopped marketing it in May 2005 when it reached the manufacturing agreement with Kos.

Biovail shares were up 21 Canadian cents at C$14.79 on the Toronto Stock Exchange by late morning. They were up 2 cents at $14.63 in New York.

"Any time that a company like this, that lives and dies on patents, ends up having a little bit of a win, I think it's important. But everybody is so focused on Wellbutrin and the Wellbutrin salt that the significance of this is somewhat downplayed," said Prakash Gowd, a biotechnology analyst at National Bank Financial.

"But I would still say this is an important positive piece of news."

Biovail, which is facing an onslaught of generic versions of its drugs, has reached several pacts with other firms recently in a bid to stave off the competition long enough to develop its drug pipeline.

Earlier this year, it reached a patent settlement with a number of companies including Watson, over its key anti-depressant Wellbutrin XL, delaying a flood of generic versions of the 150 milligram version of the treatment until 2008. ($1=$1.01 Canadian) (Reporting by Scott Anderson; Editing by Rob Wilson)