Somaxon Pharmaceuticals, Inc ( Nasdaq: SOMX ), penny stock of the biopharmaceutical company gained more than 70% and trading above $0.45 in the morning trade after company has announced a settlement on Silenor Patent Litigation With Mylan Inc and Par Pharmaceutical Companies Inc. The impact of the news might be temporary and stock might not able to hold gains for long. Cautious trade alert from buy side.

Below is the Press Release of the news

Tuesday, 17 Jul 2012 04:05pm EDT

Somaxon Pharmaceuticals, Inc. announced that it has entered into separate settlement arrangements with Mylan Inc. and its subsidiary, Mylan Pharmaceuticals, Inc. and Par Pharmaceutical Companies, Inc. and its subsidiary Par Pharmaceutical, Inc. to resolve pending patent litigation involving Silenor 3 mg and 6 mg tablets. The settlement agreement with Mylan grants Mylan the exclusive right to begin selling an authorized generic version of Silenor (i.e., a generic version sold under Somaxon's New Drug Application) on January 1, 2020, or earlier under certain circumstances. Mylan's right to sell such an authorized generic product could extend for a period of as long as 360 days, and after such period Mylan will have the non-exclusive right to sell a generic version of Silenor under its Abbreviated New Drug Application. In connection with the settlement agreement, the parties also entered into a supply agreement under which Mylan has agreed to supply the Company with commercial quantities of Silenor 3 mg and 6 mg tablets. The settlement agreement with Par grants Par the right to begin selling a generic version of Silenor 180 days after the earlier of the date that a third party's generic version of Silenor is first sold in the United States under a license from Somaxon or a final court decision that the asserted patents are not infringed, invalid or unenforceable, or earlier under certain circumstances.
Somaxon Pharmaceuticals, Inc. (Somaxon) is a specialty pharmaceutical company focused on the in-licensing, development and commercialization of branded products and late-stage product candidates. In March 2010, the United States Food and Drug Administration (FDA) approved its New Drug Application (NDA) for Silenor three milligram and six milligram tablets for the treatment of insomnia characterized by difficulty with sleep maintenance. Silenor was made commercially available by prescription in the United States in September 2010. The Company’s focus is on commercial activities relating to Silenor. As of December 31, 2010, the clinical development program for Silenor included four Phase 3 clinical trials. In September 2010, the Company acquired the worldwide license from ProCom One, Inc. (ProCom) to certain patents to develop and commercialize low dosages of doxepin for the treatment of insomnia.