Teva Pharmaceutical Industries Ltd. (TEVA) announced that the U.S. Supreme Court has agreed to hear Teva’s appeal of a decision from the U.S. Court of Appeals for the Federal Circuit that invalidated the claim of U.S. Patent 5,800,808 covering the company’s relapsing-remitting multiple sclerosis (RRMS) product, Copaxone 20mg/mL. The manufacturing patent is set to expire on Sep 1, 2015. Investors reacted positively to the news sending the stock up 6.86%.
We remind investors that the ‘808 patent was invalidated by the U.S. Court of Appeals for the Federal Circuit in 2013.
Several generic companies including Momenta Pharmaceuticals, Inc. (MNTA)/Sandoz Inc., a subsidiary of Novartis (NVS) and Mylan (MYL)/Natco Pharmaceuticals are looking to get their generic versions of Copaxone in the market. However, this latest development may deter these companies from launching their generic versions of Copaxone before the Supreme Court’s decision.
Copaxone generated approximately $4.3 billion in worldwide sales in 2013, accounting for more than 21% of the company’s total revenues. Teva has undertaken several initiatives (including developing new candidates targeting MS and a new formulation of Copaxone) to mitigate the impact of genericization.
Teva launched its 40 mg thrice-weekly (3TW) formulation of Copaxone in the U.S. and is looking to switch 30% - 50% of Copaxone patients to the new formulation by year end.
In its guidance for 2014, Teva has included both scenarios -- Copaxone remaining exclusive and Copaxone going generic from Jun 1. The entry of Copaxone generics this year could cut total revenues by about $500 million and earnings by 60 cents. According to Teva, each month of delay in the entry of generic versions of Copaxone will add $78 million to revenues and 8 cents to earnings.
Meanwhile, we remind investors that competition in the MS market is intense. Apart from injectables, several oral therapies including Gilenya and Tecfidera are also available.
Teva and Mylan both carry a Zacks Rank #2 (Buy).