Amgen Inc. AMGN announced that a district court of New Jersey has upheld the validity of its two patents on blockbuster rheumatoid arthritis drug Enbrel against Novartis’ NVS generic arm, Sandoz.
The two patents describe and claim Enbrel and methods for making it. Novartis said it will appeal the ruling to the US Court of Appeals for the Federal Circuit.
Sandoz received FDA approval for the biosimilar version of Enbrel, Erelzi in August 2016. However, Erelzi could not be launched in the United States due to the ongoing litigation with Amgen. The latest district court ruling prevents Sandoz from launching Erelzi, at least for now, and further delays its launch.
Amgen’s shares rose almost 6% on Friday as the favorable patent ruling came as a relief to investors concerned about potential competition to Enbrel. Amgen shares have risen 0.8% this year so far against 1.3% decrease registered by the industry during this period.
Despite lower demand hurting volumes of Enbrel, it remains the largest drug for Amgen, generating sales of $2.5 billion in the first half of 2019. Biosimilars of Enbrel are already eroding its revenues in the ex-U.S. market. The drug would face a rapid erosion in its sales if a biosimilar version is launched in the United States. We remind investors that Pfizer PFE has exclusive rights to Enbrel outside the United States and Canada.
Sandoz was the first company to receive FDA approval for a biosimilar version of Enbrel. The FDA had approved Erelzi for the treatment of multiple inflammatory diseases. We remind investors that the decision was not unexpected as the FDA’s Arthritis Advisory Committee (AAC) had unanimously voted (20-0) in favor of Erelzi’s approval in Jul 2016. In April 2019, the FDA approved a second biosimilar version of Enbrel, Eticovo made by Samsung Bioepis. Amgen is also in a similar litigation with Samsung Bioepis
Biosimilars are having a negative impact on key products of Amgen like Neupogen, Epogen and Sensipar. Several generic versions of Neupogen have been launched, which have significantly pulled down sales. For Neulasta, two companies, Mylan MYL and Coherus launched biosimilars in the United States in mid-2018/early 2019 while three long-acting biosimilar competitors were launched in the EU. These launches are hurting sales. More biosimilars are expected to be launched in 2019, which will put further pressure on Neulasta sales. Pfizer’s Retacrit, the first biosimilar version of Epogen, was launched in November. Other biosimilar versions of Epogen may also receive approval in 2019. Sensipar lost patent exclusivity in March 2018 and generics have been launched, at-risk.
Amgen currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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