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Lilly Gets Favorable Ruling in Alimta Patent Lawsuit in UK


Eli Lilly and Company LLY announced that it has received favorable ruling from the UK Supreme Court in a patent lawsuit against generic drugmaker, Actavis related to its key cancer drug, Alimta (pemetrexed disodium).

Per the court’s verdict, alternative salt forms of Alimta launched by Actavis, now a part of Teva Pharmaceutical Industries Limited TEVA, directly infringes the vitamin regimen patent of Alimta in the UK, France, Italy and Spain prior to expiry in Jun 2021. Teva bought Actavis, Allergan plc’s AGN generic business in Aug 2016.

Shares were up around 1% on Friday. Lilly’s share price has risen 11.9% so far this year, slightly better than an11.1% increase witnessed by the Zacks-classified Large-Cap Pharma industry.

We remind investors that in Feb 2016, the UK High Court ruled that a generic version of Alimta proposed by Actavis will not infringe the vitamin regimen patent in the UK, France, Italy and Spain, given that it is diluted only with dextrose solution. In Jun 2015, the UK Court of Appeal had said that Lilly’s patent would be indirectly infringed by the sale of certain alternative salt forms of pemetrexed with the instructions to dilute them with saline solution. In the latest ruling, the UK Supreme Court has affirmed this finding by the UK Court of Appeal. The full judgment will be published on Wednesday.

Following the decision by the U.K. Appellate court, Actavis launched generic pemetrexed Armisarte in the EU, at risk. The latest announcement by the UK Supreme Court implies that Actavis’ generic pemetrexed products infringe the patent, regardless of the diluent used in reconstitution or dilution.

We remind investors that in Sep 2015, a U.S. district court also ruled in favor of Lilly on the validity of the vitamin regimen patent and in Jan 2017, a U.S. Appellate court confirmed the lower court’s decision.

While the compound patent covering Alimta in the U.S expired in Jan 2017, the vitamin regimen patent will remain valid till Jun 2021 (plus pediatric exclusivity expiring in 2022), if Alimta’s patent is ultimately upheld through all the remaining challenges. The compound patent has already expired in major European countries and Japan in Dec 2015.

A number of generic manufacturers including Teva and Sandoz, the generic arm of Novartis AG NVS are seeking approvals in various countries to market generic forms of Alimta prior to the expiration of its vitamin regimen patents.

We note that Alimta is one of the top revenue grossers at Lilly and a longer commercial life for Alimta would provide top-line support as several products in Lilly’s portfolio are already facing patent expiration.

Alimta sales, however, declined 13% year over year to $489.9 million in the last reported quarter – first quarter of 2017 -reflecting lower demand in the U.S. due to competitive pressure mainly from immuno-oncology agents. Outside the U.S., sales of Alimta were hurt by loss of exclusivity in several countries and lower realized prices.

The entry of generic competition for Alimta following the loss of effective patent protection will cause a rapid decline in revenues for the product.

Lilly has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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