Supreme Court Denies Teva's Request - Analyst Blog

Teva Pharmaceutical Industries Ltd. TEVA announced that the Chief Justice of the U.S. denied its appeal of a decision from the U.S. Court of Appeals for the Federal Circuit that invalidated the claim of U.S. Patent 5,800,808 covering Teva's relapsing-remitting multiple sclerosis RRMS product, Copaxone 20mg/mL. The company said that it will continue pursuing its appeal in the Supreme Court.

We remind investors that the ‘808 patent was invalidated by the U.S. Court of Appeals for the Federal Circuit last year. The U.S. Orange Book patent covering Copaxone is set to expire in May 2014 and worldwide in May 2015.

Copaxone generated approximately $4.3 billion in worldwide sales in 2013, accounting for more than 21% of the company's total revenues. U.S. sales were $3.2 billion in 2013. Teva has undertaken several initiatives (including developing new candidates targeting multiple sclerosis MS and a new formulation of Copaxone) to mitigate the impact of genericization.

Earlier this year, Teva launched its three times-weekly (3TW) formulation of Copaxone (40mg/mL) in the U.S. and is looking to switch 30%−50% of Copaxone patients to the new formulation by year's end.

We note that several generic companies including Momenta Pharmaceuticals, Inc. MNTA/Sandoz Inc. and Mylan MYL/Natco Pharmaceuticals are looking to get marketing approval for their generic versions of Copaxone. Mylan expects to gain approval for its generic version by May 25 and expects to be the first to launch a generic version of the product.

Meanwhile, Teva settled its patent infringement lawsuit with Pfizer PFE regarding its generic version of Pfizer's Celebrex (50, 100, 200 and 400 mg capsules) in the U.S. Teva, which has received tentative FDA approval for its generic version of Celebrex, can launch its generic Celebrex in the U.S. in or before Dec 2014. According to IMS Health, Celebrex generated revenues of $2.2 billion in 2013.

We remind investors that Teva's guidance for 2014 includes two scenarios: Copaxone remaining exclusive and Copaxone going generic from Jun 1, 2014. The entry of Copaxone generics in 2014 could reduce total revenues by about $500 million and earnings by 60 cents. According to Teva, each month of delay in the entry of generic versions of Copaxone will add $78 million to revenues and 8 cents to earnings.

The MS market is crowded with several approved drugs (injectables and oral therapies) including Gilenya and Tecfidera.

Teva carries a Zacks Rank #2 (Buy). Momenta and Mylan also hold a Zacks Rank #2.