Avanir Wins Lawsuit, Shares Up - Analyst Blog

Shares of Avanir Pharmaceuticals, Inc. AVNR soared 45.6% after the company announced that the U.S. District Court for the District of Delaware has ruled the patent infringement lawsuit against Par Pharmaceuticals, Inc. and Impax Laboratories, Inc. IPXL in its favor. Par Pharma and Impax Labs had filed abbreviated new drug applications (ANDAs) to get their generic versions of Avanir's Nuedexta approved.

We note that Novartis' NVS generic arm Sandoz, Actavis ACT, Wockhardt, Par Pharma and Impax Labs had all filed ANDAs for their generic versions of Nuedexta. Avanir settled its Nuedexta patent litigation with Sandoz, Actavis and Wockhardt in August and September 2013. Sandoz, Actavis and Wockhardt can now sell their generic versions of Nuedexta from Jul 30, 2026.

The favorable decision from the court regarding the lawsuit against Par Pharma and Impax has resulted in Nuedexta gaining market exclusivity through 2026.

We note that Nuedexta was launched in the U.S. in Jan 2011 for the treatment of pseudobulbar affect PBA. Net Nuedexta revenues grew 56.6% year over year to $23.3 million in the first quarter of fiscal 2014 ending Dec 2013. This was the eleventh consecutive quarter of double-digit sales growth for Nuedexta.

Avanir is looking to expand Nuedexta's label. Nuedexta is currently being studied for two additional indications in phase II, one for the treatment of agitation in Alzheimer's disease (top-line data, second half of calendar 2014) and the other for levodopa induced dyskinesia (LID) in patients suffering from Parkinson's disease (second half calendar 2014). Avanir enrolled the first patient in a proof-of-concept phase II study in LID. 

Avanir carries a Zacks Rank #3 (Hold). Some better-ranked stocks include Impax Labs and Actavis, both carrying a Zacks Rank #2 (Buy).