AstraZeneca PLC (AZN.L) said on Thursday it has reached a settlement with privately held Handa Pharmaceuticals LLC that will keep the company from selling a generic form of its Seroquel XR anti-psychotic medicine in the United States until late 2016.

AstraZeneca said the settlement does not resolve ongoing patent battles with other generic drugmakers that also aim to launch generic forms of Seroquel XR.

AstraZeneca is still set to go to trial on Monday in U.S. federal court in Trenton, New Jersey with five generic drugmakers, including Mylan Inc (MYL.O), unless further settlements are reached. Intellipharmaceuticals, which has also challenged the Seroquel XR patent, is not part of that lawsuit.

The pill is a longer-acting form of Seroquel, which also treats depression and bipolar disorder. The drugs have combined annual U.S. sales of about $4 billion, of which Seroquel XR accounts for roughly $750 million.

Worldwide annual sales of the Seroquel franchise were $5.3 billion in 2010 -- making the products the company's second biggest seller behind its cholesterol fighter Crestor.

An analyst for Jefferies & Co estimated that if generic Seroquel XR were to hit the U.S. market in January of 2013 it could cut Astra earnings by four percent though 2016.

Wall Street is expecting generic forms of basic Seroquel to hit the U.S. market in April 2012, when the U.S. patent on the drug's active ingredient lapses. The cheaper generics would likely soon wrest away the lion's share of the medicine's U.S. sales unless Astra is successful in switching patients over to the longer acting drug.

But AstraZeneca has contended that other patents protect Seroquel XR from 2012 to November 2017, including technology to extend the time the medicine remains active in the bloodstream.

The London-based drugmaker said the Handa settlement will allow the tiny California company to introduce its generic form of Seroquel XR on November 1, 2016, or earlier, under certain circumstances.

The settlement will have no impact on AstraZeneca's 2011 financial forecast, the company said.

U.S. regulators first approved Seroquel XR in May 2007 to treat schizophrenia.

Court California Settlement New Jersey