Teva Plunges After Two U.S. Copaxone Patents Invalidated

  • Pharmaceutical maker loses protection of new MS treatment
  • Mylan, Amneal win U.S. agency challenges to Copaxone

Teva Pharmaceutical Industries Ltd. fell 3 percent after a U.S. agency invalidated two of the patents protecting Copaxone, a multiple sclerosis drug that generates 20 percent of its revenue. The company said it will appeal.

The patents are among three being challenged at the U.S. Patent Trial and Appeal Board. The agency is scheduled to issue a final decision on the third one by Sept. 1, according to Mylan NV, which petitioned for the patents to be reviewed. The board has rejected a Mylan petition to invalidate a fourth patent, though a second petition against the patent is pending.

The three patents under review expire in 2030 and specifically cover administering the drug in a 40-milligram dosage three times a week, which brings in $4 billion a year in annual sales. The original version of Copaxone, consisting of 20 milligrams taken every day, began facing generic competition last year.

“We are prepared to defend the full suite of our intellectual property through the PTAB and the U.S. courts regardless of the time required,” Teva Chief Executive Officer Erez Vigodman said in a statement.

For Bloomberg Intelligence primer on the litigation, click here

Legally, the patents remain valid and enforceable until all appeals are completed. A trial on the first four patents is scheduled to begin in district court in September. A fifth patent was issued earlier this month.

Novartis AG and Momenta Pharmaceuticals Inc. jointly sell a cheaper version of the daily shot. Even with the generic-drug competition, Teva has been able to maintain sales by switching about 80 percent of patients to the 40-mg injection.

Teva American depositary receipts, each representing one ordinary share of the Israeli-based company, dropped $1.57 to $51.63 on Wednesday. Momenta jumped 11 percent.

While Teva has expressed confidence in its patents, analysts have said generic competition could wipe out as much as $3.2 billion in sales by 2019.

Difficult Process

The ruling from the patent office is just one step in a difficult process for the generic-drug manufacturers. The September trial is scheduled in Wilmington, Delaware, in the civil case Teva filed with a ruling expected early next year. It’s harder to invalidate a patent in district court than the patent office.

Both the patent office challenges and any ruling from the district court will head to the same appeals court in Washington, one that specializes in U.S. patent law. Even though the patent office invalidated the patents, generic-drug makers typically wait until the U.S. Court of Appeals for the Federal Circuit rules before entering the market.

The would-be competitors also have to make it through the U.S. Food and Drug Administration approval process. It took Momenta seven years to obtain regulatory permission to sell its 20-mg version, while others including Mylan have yet to receive approval.

The issue in the challenges had to do with the timing of administering the drug. The patents cover administering an injection three times over a seven-day period. Mylan and Amneal Pharmaceuticals LLC, which also filed petitions, successfully argued that was little different from dosing regimens in which a drug is given every other day, which would be three times in one week and four times in the second.

Mylan CEO

Mylan Chief Executive Officer Heather Bresch called the decisions “comprehensive, well-reasoned and highly persuasive to detailing the bases for the invalidity” of the patents.

Mylan said it believes it was one of the first to challenge the patents at the FDA, so should receive 180 days of marketing exclusivity upon regulatory approval.

The patent office declined to review a fourth Copaxone patent based on a challenge filed by Mylan. A separate challenge filed by Amneal on the same patent was filing in July and is still pending. The patents are owned by Yeda Research and Development Co., which grants Teva an exclusive license. A fifth patent on the drug was issued Aug. 2.

Teva only needs one of the patents to survive a challenge to block competition from generic-drug makers, said Aude Gerspacher, an analyst with Bloomberg Intelligence.

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