Teva Shares Jump as Court Upholds Patents on MS Drug
06/25/2012| 02:09pm US/Eastern
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--Ruling helps Teva beat back threats to its top-selling drug from rivals Mylan and Momenta
--Teva shares jump 5.4%, while shares of Momenta and Mylan fall 21% and 1.9%, respectively
By Mia Lamar and Melodie Warner
A federal court upheld Teva Pharmaceutical Industries Ltd.'s (TEVA) patents on its multiple-sclerosis drug Copaxone, helping the generic drug giant to beat back threats to its top-selling drug from rivals Mylan Inc. (MYL) and Momenta Pharmaceuticals Inc. (>> Momenta Pharmaceuticals, Inc.).
Shares of Teva jumped 5.4% in midday trade Monday to $40.06, while the stocks of Momenta and Mylan fell 21% and 1.9%, respectively.
The long-running dispute had been a drag on Teva's stock as investors worried about the potential loss of exclusivity on a treatment that brought in $3.57 billion of revenue last year, or nearly 20% of Teva's revenue.
The dispute also put Teva--the world's biggest manufacturer of generic drugs--in the unusual position of defending against some of the same arguments it has made against other branded drugs in previous patent battles. By seeking to cast Teva's claims to its branded drug as "invalid and unenforceable," rivals Mylan and Momenta employed a well-trodden tactic of Teva itself.
A U.S. district court in New York rejected those claims, however, ruling Friday that generic versions of Copaxone being separately developed by Mylan and Momenta infringe upon Teva's claims to the drug.
Executives at Mylan and Momenta voiced disagreement with the ruling and pointed to possible appeals.
"Mylan is disappointed in the Court's decision, and while we have not yet had the opportunity to review the Court's opinion, we fully intend to evaluate our options for an appeal once the Court's full opinion becomes available," Mylan Chief Executive Heather Bresch said in a statement.
Analysts weighing in on the ruling said a generic threat to Copaxone now appears off the table until Teva's patents on the drug begin to expire in mid-2014.
"The decision is clearly a huge sigh of relief for Teva," Needham analysts wrote in a note to clients. "This decision significantly de-risks the story over the intermediate term, removes a huge overhang and arguably eliminates the biggest reason to not own shares."
The investment firm also cast doubt on the potential for successful appeals of Friday's ruling. "It is difficult to envision an appellate court overturning lower court rulings on all patents," analysts wrote.
Investors also appeared unenthusiastic Monday about appeal efforts. Shares of Momenta slumped to $13.46 in recent trade, its lowest point since late October, while shares of the larger Mylan dropped to $20.83.
Write to Mia Lamar at mia.lamar@dowjones.com
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