The U.S. District Court for the Northern District of West Virginia ruled against Biogen Inc., of Cambridge, Mass., and in favor of Mylan NV, of Hertfordshire, U.K., in a patent dispute regarding Biogen’s blockbuster multiple sclerosis drug, Tecfidera (dimethyl fumarate). The court ruled that Mylan “has established by clear and convincing evidence that the asserted claims of the [8,399,514] Patent are invalid for lack of written description,” thereby invalidating the patent, which provides exclusivity protection to the drug until February 2028.

Biogen can appeal the decision, which analysts expect will take 12 to 18 months. It is unlikely Mylan will opt for an at-risk launch of its generic in the meantime, as Mizuho analyst Salim Syed pointed out the risk of “substantial later damages” should Mylan lose on appeal. “And remember in this particular circumstance, [Biogen] has defended the IP well up to this point,” Syed wrote in a research note. Earlier this year, the Patent Trial and Appeal Board determined Mylan did not sufficiently demonstrate its claim and dismissed the challenge.

However, the district court ruling was viewed as disappointing by analysts who had previously modeled Tecfidera revenue based on an exclusivity lasting into 2028. The drug has become by far the biggest contributor to Biogen’s revenues since its 2013 approval. It comprised about $4.4 billion – roughly one-third – of the company’s total product revenue of $11.4 billion in 2019.

Mylan’s was the only generic litigation in West Virginia, but there are more than 20 other generic Tecfidera cases being considered by the U.S. District Court for the District of Delaware. Should the Delaware court rule the same as West Virginia, the “Street will assume [very] high odds of generics by mid-2021,” wrote Evercore ISI analyst Umer Raffat, calling that “the downside scenario.”

The Tecfidera ruling – as well as increasing competitive pressure to its spinal muscular atrophy drug, Spinraza (nusisersen), from PTC Therapeutics Inc. and Roche Holding AG’s risdiplam – also puts more pressure on Biogen’s Alzheimer’s disease candidate, aducanumab. After a fresh analysis of phase III data rescued the amyloid beta-targeting program from termination late last year, Biogen is looking at an FDA filing in the third quarter of this year. But a win is far from guaranteed. “We have viewed the FDA filing as high risk, but also high reward,” Cowen analyst Phil Nadeau wrote in a research note, estimating a 30% to 50% chance of FDA approval, though noting the drug could be “worth $150/share if marketed.” Either way, the “2021 decision in aducanumab’s FDA review will be a major binary event” for Biogen, Nadeau said.

Biogen’s shares (NASDAQ:BIIB) fell $21.16, or 7.5%, to close June 18 at $260.30. Shares of Mylan (NASDAQ:MYL) ended the day at $16.33, up 36 cents.

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