Supernus Pharma Should Have More Strength After Epilepsy Drug Patent Decision, Northland's Buck Says

Supernus Pharmaceuticals Inc SUPN is up more than 3 percent Thursday and more than 17 percent year to date.

According to its press release, Supernus' most recent earnings release earlier in March came in as records for both the fourth quarter and the full year 2015.

"2015 was a year of significant achievements, where we delivered on our commercial strategy for Trokendi XR and Oxtellar XR, and progressed our pipeline in late-stage clinical testing […] We met our upwardly revised product sales guidance, with total net product sales reaching $143.5 million in 2015. Based on the strength of our base business, we were able to achieve, for the first time, profitability from on-going operations each quarter and for the full year," Supernus President and CEO Jack Khattar commented.

Trokendi XR and Oxtellar XR are both marketed for epilepsy.

Related Link: Supernus Up 3.7%, Federal Court Says Actavis Is Infringing On Patents

Analyst's Take

According to a Northland Capital Markets research note, Supernus is due some share strength.

Supernus' Trokendi was recently involved in an ongoing patent case. On Wednesday, the ruling came back positively for the drug, with Justice Wigenton (U.S. District Court of New Jersey) issuing "an order construing claims in-line with Supernus' construction in six of seven claims," explained Northland. The move, in Northland's view, "could improve litigation settlement chances."

Based on the positive ruling, Northland reiterated its Outperform rating, with an attached price target of $22.

The analysts justified maintaining their thesis by reaffirming the importance of Trokendi to the pharmaceutical company, "Trokendi SR is key for the Supernus outlook at 80 percent of 2016E product sales and estimated 50 percent growth in 2016 to $165.8 million."

"Accordingly, items that lessen risk of patent litigation are positive for shares. Accordingly, a win on claims construction in the patent litigation versus Actavis Generics (still part of Allergan: AGN-Not Rated) and Zydus (India-Not Rated) is a net positive," the analysts explained.

At time of writing, Supernus Pharma was up 3.22 percent on the day and trading at $15.70.