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Teva Beats Momenta, Mylan in Copaxone Case

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An Israel-based pharmaceutical company, Teva Pharmaceutical (NASDAQ: TEVA), announced over the weekend that it had received a favorable court ruling in a dispute over its COPAXONE patent.

Teva had filed the suit against Momenta Pharmaceuticals (NASDAQ: MNTA) and Mylan Laboratories (NYSE: MYL) regarding its relapse-remitting Multiple Sclerosis drug. The court decision covers several of Teva's patents related to COPAXONE.

Momenta's and Mylan's claims that the COPAXONE patents are invalid were rejected by the judge. The companies were seeking FDA approval for their generic versions of COPAXONE. According to Teva Pharmaceutical's news release, the ruling should prevent the FDA from approving the generics. Momenta and Mylan will be unable to sell their generic versions of COPAXONE in the U.S. until the Orange Book patents expire in May, 2014.

Additionally, Teva says it expects that the defendants will be enjoined from selling their products until the process patent expires on September 1, 2015.

Dr. Jeremy Levin, Teva's President and CEO noted, “Teva is confident COPAXONE will remain a proprietary, global market leading product for the reduction of relapses in patients with RRMS over the product's lifecycle given the strength of its intellectual property rights.”

COPAXONE sales are expected to contribute approximately $3.8 billion to Teva's FY 2012 sales, which makes up roughly 18% of the company's estimated sales. It is also estimated that Teva will gain $2.5 billion in profits after being able to keep the COPAXONE patent until 2015.

The stocks involved in the patent infringement suit have moved heavily during Monday's trading session. Teva traded up over 5%, whereas the losing companies Mylan and Momenta dropped over 2% and 21%, respectively.

However, in spite of Monday's rally, Teva is still down nearly 20% from its highs in May. Additionally, the pullback in the shares of Mylan (NYSE: MYL) is fairly small given that it just lost a major lawsuit.

Canaccord Genuity analyst, Randal Stanicky, pointed out in his research note this morning that “The decision now pushes any opportunity for MYL out. There was contribution in 2013 guidance though management has said it's not needed to hit the target (not in our numbers). While there is cushion via the recently announced buy-back, we remain below consensus this year and next with a meaningful source of potential upside now removed.”

Therefore, the relatively small drop in Mylan could provide an opportunity short the stock, as it just lost a major bullish catalyst.

You can follow me on Twitter @TuomoKallio.

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