Shares of Biogen Inc. BIIB declined 7.5% on Thursday after the U.S. District Court for the Northern District of West Virginia invalidated a patent related to its blockbuster multiple sclerosis (MS) drug, Tecfidera, in a patent dispute with generic drugmaker Mylan MYL. The unfavorable patent ruling was given for lack of written description.
Mylan had challenged Biogen’s ‘514 patent, which covers the treatment of multiple sclerosis with 480mg dose of dimethyl fumarate (DMF), the active ingredient of Tecfidera. The patent provides market exclusivity to the medicine in the United States until 2028.
We remind investors that in February, the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (USPTO) had ruled in favor of Biogen over an inter partes review (IPR) filed by Mylan relating to the same patent of Tecfidera.
Back then, the favorable ruling raised hopes for Biogen’s chances of maintaining Tecfidera’s exclusivity until 2028. Even investors started expecting a positive decision for Biogen from the district court cases in both West Virginia and Delaware.
However, although the company plans to appeal the West Virginia court’s decision on the patent, it brings its opponent Mylan a step closer to launch its dimethyl fumarate generic product upon the receipt of the FDA approval. Mylan’s regulatory application seeking approval for its generic version of Tecfidera is under review with the regulatory agency. Several other generic companies are also seeking approval for their generic versions of Tecfidera.
If the Delaware court gives a verdict similar to the West Virginia court ruling, then a Tecfidera generic could be introduced as early as 2021, much earlier than 2028 when the patent will expires. This could be a huge blow to Biogen as Tecfidera is its biggest revenue generator.
Tecfidera generated sales worth $4.4 billion in 2019, reflecting an increase of 4% year over year. The drug contributed almost half of Biogen's total revenues during the year.
Shares of Biogen have declined 12.3% so far this year against the industry’s increase of 8.7%.
Notably, in 2017, Biogen reached a settlement with Danish biotech Forward Pharma A/S regarding the same patent. Per the contract, Biogen agreed to pay $1.25 billion for buying the license to Forward Pharma’s intellectual property covering DMF.
Zacks Rank & Other Stocks to Consider
Biogen currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the healthcare sector include Ligand Pharmaceuticals Incorporated LGND and Vertex Pharmaceuticals Incorporated VRTX, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ligand’s earnings estimates have been revised 7.2% upward for 2020 and 10% for 2021 over the past 60 days. The stock has gained 4.8% year to date.
Vertex’s earnings estimates have moved 17.2% north for 2020 and 8.1% for 2021 over the past 60 days. The stock has rallied 27.5% year to date.
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