US appeals court shortens patent protection for Teva's Copaxone

The US Court of Appeals for the Federal Circuit on Friday reversed a district court ruling related to Teva's Copaxone (glatiramer acetate) patent, resulting in the drug's patent protection being shortened to 2014 rather than 2015. However, Morningstar analyst Michael Waterhouse said Teva shares were not greatly impacted by the appeals decision because analysts and investors had already assumed Copaxone, which generated sales of $4 billion last year, would face competition from at least one generic product in 2014.

The decision stems from litigation Teva filed against two teams developing generic versions of the multiple sclerosis drug, one consisting of Novartis' Sandoz unit and Momenta Pharmaceuticals and the other Mylan and Natco Pharma. Both groups have applied to the FDA to bring their generic versions to market. The court upheld some claims pertaining to the nine patents involved in the drug, but declared other patents expiring in May 2014 and one patent expiring in September 2015 to be invalid. The appeals decision also follows a US District Court ruling earlier this month that dismissed Teva's lawsuit alleging that Mylan's FDA submission would infringe upon its Copaxone patents.

Waterhouse suggested that it was possible that neither generic product is ready for launch next year because of the complexity in manufacturing Copaxone. However, regardless of whether generic products are introduced, Waterhouse predicts Copaxone sales will decline to $3.4 billion in 2014 due to competition from newer drugs, including Biogen Idec's Tecfidera (dimethyl fumarate) and sanofi's Aubagio (teriflunomide).

Teva expressed disappointment in the ruling and announced its intent to appeal the decision. The drugmaker noted that any companies intending to market generic Copaxone would need FDA clearance, and "at this point, it is unclear what the requirements would be for approval of complex synthetic peptides." Teva suggested that "given the complexity of Copaxone…unpredictable differences between a proposed generic product and [the drug] could lead to immunogenic effects in patients."

Nonetheless, Sanford C. Bernstein & Co. analyst Ronny Gal suggested that a generic approval in 2014 is increasingly possible given that "over the past two years, the FDA appears to have shifted its approach to complex generics," estimating the chances of a generic entrant next year at 50 percent. "The agency approved most pending complex products and it has also provided guidance alleviating clinical requirements for several other drugs previously considered 'undoable'," he said, citing approval of generics for sanofi's anticoagulant Lovenox (enoxaparin) in 2010.

Earlier this month, Teva announced Phase III results demonstrating that a higher dose injection of Copaxone, delivered three times weekly, significantly reduced the risk of confirmed relapses by 34 percent, compared with placebo. The Israeli drugmaker has said it expects 30 percent to 35 percent of its patients to switch to the higher-dose injection. However, UBS analyst Marc Goodman indicated that the appeals decision "doesn't give Teva much time to convert patients," adding that he changed his earnings projection to reflect a generic competitor by 2014 and a 15-percent patient conversion, instead of an earlier 30-percent forecast.

Meanwhile, Mylan CEO Heather Bresch remarked that the appeals decision will permit the company to launch its generic version of Copaxone in May 2014, pending final regulatory approval. Shares of Momenta Pharmaceuticals, which is co-developing a generic version of Copaxone with Novartis' Sandoz unit, rose nearly 13 percent on the news.

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