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Pharma Stock Roundup: Mylan Up, Teva Down on Copaxone News, Lawmakers Question Allergan Deal

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This week, companies like Allergan AGN, Teva TEVA and Mylan MYL were in the limelight. While Mylan and Teva were in the news related to the FDA approval of Mylan’s generic versions of Teva’s top-selling branded drug, Copaxone, Allergan is under fire for its agreement with the Saint Regis Mohawk Tribe for Restasis.

Recap of the Week’s Most Important Stories

Allergan’s Restasis Deal under Fire: Allergan’s deal with the Saint Regis Mohawk Tribe, announced early in September, has come under fire with lawmakers questioning the unconventional move adopted by the company to protect its blockbuster eye drug, Restasis, from generic competition. Under the terms of the deal, Allergan transferred six patents related to Restasis to the Tribe while being granted exclusive licenses to the patents. In return, Allergan will pay $13.75 million upon execution of the agreement as well as annual royalties of $15 million.

Restasis is Allergan’s second best-selling drug bringing in sales of almost $1.5 billion in 2016. While one of the original patents on the drug's active ingredient was set to expire in 2014, Allergan filed additional patents extending protection to 2024.

Lawmakers pointed out that the sovereign status of Native American tribes would make any patent challenges lengthy and complex as tribes may be immune from the legal claims made by generic drug makers to challenge patents. In fact, the Tribe is filing to dismiss the ongoing inter partes review (“IPR”) of the Restasis patents based on their sovereign immunity from IPR challenges.

The deal has basically raised concerns that it will curb generic competition in the pharmaceutical industry and discourage generic drugmakers from making cheaper copy-cat versions of expensive drugs.

Allergan has been asked by the Committee on Oversight and Government Reform to provide certain documents and information about the deal by Oct 17, 2017.

Mylan’s Gain, Teva’s Loss: In a major development, Mylan gained FDA approval for its generic version of Teva’s top-selling branded drug, Copaxone, for multiple sclerosis. Mylan gained approval for the 40 mg (thrice weekly) dosage as well as the once-daily 20 mg formulation. With Mylan being among the first applicants to challenge the 40 mg patent, the company could, therefore, enjoy 180 days of exclusivity though a formal communication from the FDA regarding the same is yet to come. Mylan has launched both products. According to QuintilesIMS, brand sales for the 20 mg and 40 mg doses were approximately $700 million and $3.64 billion, respectively, for the 12 months ending Jul 31, 2017. Mylan also gained approval for the 40 mg dose in the EU.

While the FDA approval of generic Copaxone is a big boost for Mylan, it is a major blow for Teva which is currently facing a whole lot of challenges. Teva issued a statement saying that the launch of the 40 mg formulation before the final resolution of pending patent infringement lawsuits with Mylan will be treated as an “at-risk” launch which means Mylan would have to pay significant damages if the court upholds the patents protecting the drug.

The entry of the 40 mg formulation and the entry of a second generic version of the 20 mg formulation (Sandoz and Momenta have been on the market for quite a while with Glatopa, a generic version of the 20 mg dose) is expected to cut Teva’s 4Q earnings by at least 25 cents per share. Additional details should be out when the company announces third quarter results on November 2. The entry of generic Copaxone just adds to the existing list of problems being faced by Teva (Read more: Teva Shares Plummet After Mylan's Copaxone Generic Gets FDA Approval).

Novo Nordisk Gets FDA Approval for Fiasp: Novo Nordisk NVO, which has a strong presence in the diabetes market, provided some regulatory updates on its diabetes franchise. The company gained FDA approval for Fiasp, a fast-acting mealtime insulin, for the treatment of adults with diabetes. The approval process was not exactly smooth with the company receiving a complete response letter last year when the agency had asked for additional information related to the assay for the immunogenicity and clinical pharmacology data (Read more: Novo Nordisk's Fiasp Gets FDA Nod for Diabetes in Adults).

Meanwhile, the European Medicines Agency’s (“EMA”) Committee for Medicinal Products for Human Use (“CHMP”) endorsed the company’s plan to update the EU label of Tresiba to include results from the DEVOTE study showing a significant reduction in the risk of severe hypoglycemia.

Novo Nordisk is a Zacks Rank #2 (Buy) stock – you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sanofi/Regeneron Score a Win in PCSK9 Inhibitor Litigation: Sanofi SNY and partner Regeneron got a major boost with the U.S. Court of Appeals for the Federal Circuit ordering a new trial related to Amgen’s claims regarding patents for PCSK9 inhibitors. The court also vacated the permanent injunction in the lawsuit which means Sanofi and Regeneron can continue selling their PCSK9 inhibitor, Praluent, in the United States.

Favorable Court Ruling for Lilly: Another company that got a positive ruling on the patent front is Eli Lilly and Company LLY. The company said that the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office (“PTO”) ruled in its favor regarding the vitamin regimen patent for cancer therapy, Alimta (pemetrexed for injection). If the patent is upheld, Alimta will be safe from generic competition until May 2022. This decision has removed an overhang on the shares. Alimta brought in sales of more than a billion dollars in the first half of 2017.

This week, Lilly also gained FDA approval for a new cancer treatment, Verzenio, for use in women with HR+, HER2- advanced breast cancer.

Lilly has gained 19.2% year to date, compared to the 17.9% rally of the industry it belongs to.

Performance

Large Cap Pharmaceuticals Industry 5YR % Return

The NYSE ARCA Pharmaceutical Index gained 1.9% so far this week. Among major stocks, Lilly is up 3.1%. Over the last six months, Bristol-Myers was up 21.8% while Glaxo GSK declined 0.7% (See the last pharma stock roundup here: J&J Drug Gets CRL, Label Expansion for Merck and BMY Drugs).


What's Next in the Pharma World?

Watch out for the usual pipeline and regulatory updates.

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