Less than a week after one of the most high-profile legal cases of the year – pitting manufacturers of two of the most high-profile new drug launches – got underway, a jury delivered a decisive victory for Amgen, finding that its patents covering mAb inhibition of PCSK9 are valid, and thus are indeed being infringed by Regeneron and Sanofi’s Praluent (alirocumab).
Why did the jury find in favour of Amgen?
Amgen first filed suit in 2014 claiming that Regeneron and Sanofi were infringing its IP, though the latter companies were still able to launch at risk while the case played out. Prior to last week, the parties had already agreed that Praluent infringes on two Amgen patents, however, the defendants argued that the claims in question should be invalidated because of obviousness, not being enabling, and lacking adequate written description. The presiding judge decided to discard the obviousness argument before the case went to the jury, which wasted little time in rejecting Regeneron and Sanofi’s other two contentions.
What is the worst-case scenario for Regeneron and Sanofi?
Amgen has requested a permanent injunction against the companies’ ability to manufacture and commercialise Praluent, which raises the spectre – however unlikely – of the removal of the hypercholesterolaemia drug from the market. This would clearly be a big blow to Regeneron and Sanofi since their drug and Amgen’s Repatha (evolocumab) are each expected to grow into blockbusters over the next few years.
Sales for both products have been sluggish since their respective launches last year, which is a function of the success that payers have had in restricting access. Consensus sales for the two drugs combined is roughly $700 million this year, though results from all-important cardiovascular outcomes studies will start emerging in the next few months and should, if successful, help accelerate their adoption. The Street expects that combined sales of the two anti-PCSK9 mAbs will jump to $1.5 billion in 2017.
Where do things go from here?
Regeneron and Sanofi have stated that they “strongly disagree” with the verdict and plan to appeal, which could take another couple years to play out, during which time the companies will continue to market Praluent.
In the meantime there are several milestones that investors will be on the lookout for, the two most near-term being a hearing scheduled to begin on March 23 to discuss the possibility of a permanent injunction, followed by a second hearing to set the damages and liabilities that Amgen will be owed. The company amended its initial claim earlier this year to include ‘wilful infringement’ against Regeneron and Sanofi, which allows the patent holder to request enhanced damages.
Is there any precedent for a reversal of fortune?
There is in fact some reason to believe that Regeneron and Sanofi could still end up on the winning side as a decision in a similar case involving manufacturers of anti-TNF alpha mAbs came down in favour of Johnson & Johnson, which was originally awarded $1.7 billion in damages in 2009, though AbbVie was able to get the decision overturned on appeal in 2011.
What is the most likely outcome?
The Street’s base-case assumption is that an injunction is highly unlikely, in part because Regeneron and Sanofi will be able to argue that removal of Praluent from the market would not be in the public’s interest. A more likely outcome, according to analysts, is a settlement whereby the companies agree to pay royalties of between 5 percent and 10 percent of sales of their product to Amgen.
It is worth noting that “the judge viewed Regeneron’s ‘written description’ defence as not being baseless so theoretically there is still room to show that the Amgen patents are invalid in future litigation,” remarked RBC analyst Adnan Butt. As a result, Amgen may be more inclined to enter into a settlement agreement rather than risk going through the appeals process.
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