Auxilium Pharmaceuticals Inc sued Watson Pharmaceuticals Inc alleging that it infringed patents related to Auxilium's testosterone gel Testim.
A unit of Watson had filed with U.S. health regulators last month for the approval of a generic version of Testim.
As a result of the lawsuit, regulatory approval of Watson's generic version will be stayed for 30 months, or until the litigation is resolved, Auxilium said.
In its suit, Auxilium alleged that Watson's gel infringed ten patents that are expected to expire between 2023 and 2025.
Auxilium had entered into a co-promotion agreement with a unit of GlaxoSmithKline on Monday to jointly sell Testim.
Shares of Auxilium, which have risen 10 percent since the company entered into the GlaxoSmithKline agreement, closed at $19.23 on Wednesday on the Nasdaq. Watson shares were at $70.71 at close on the New York Stock Exchange on Wednesday.
(Reporting by Adithya Venkatesan in Bangalore; Editing by Sreejiraj Eluvangal)