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Jazz Pharma Investors: Did You Catch This Favorable Ruling?

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Shares of Jazz Pharmaceuticals plc - Ordinary Shares (NASDAQ: JAZZ) surged as much as 9 percent after the company got a favorable ruling for its Xyrem patent.

"PTAB ruling declining to institute 18 claims in the '306 Xyrem (dosing adjustment) patent further validates our thesis that 2016 legal events will de-risk near/medium term Xyrem generic risk and provide JAZZ with additional leverage to structure value enhancing patent settlements with the patent challengers," Leerink analyst Jason Gerberry wrote in a note.

Gerberry stated, "This evening the PTAB ruled that Ranbaxy failed to establish a reasonable likelihood it could prevail in its IPR challenge to claims 1-18 of '306, but PTAB did institute proceedings on claims 19-34. PTAB also ruled Endo International plc - Ordinary Shares (NASDAQ: ENDP)'s IPR of '306 was rejected in its entirety."

"Effectively, what this means is that the IPR outcome has no bearing on claims 1-18 so JAZZ will continue to have an Orange Book listed patent the generics will need to challenge in district court, a process that could take 2+ yrs," the analyst highlighted.

According to Gerberry, "Xyrem is a $1B franchise for sleep disorders with 3 families of patents expiring in mid-2020 (formulation), 2022-24 (REMS), and 2033 (dosing adjustment)."

The analyst noted that "the conclusions of PTAB (Patent Trial and Appeal Board) were consistent with MEDACorp patent specialist feedback regarding conflicting prior art and uncertainty around drug-drug interaction profile."

The analyst continued,"key independent claim #1 of the '306 patent covers a method of reducing Xyrem dosage when concomitantly prescribed with valproate. This patent claim aligns with the Xyrem package insert which describes the dose adjustment requirements."

Gerberry's note showed why PTAB ruled in favor of Jazz.

"In its decision, the PTAB states Ranbaxy (1) did not account for the prior art's teaching away of the co-administration of Xyrem and valproate, e.g., prior to the patent Xyrem's old label carried a black box warning that Xyrem should not be taken with other CNS depressants such as valproate; (2) skilled artisan would not have had reasonable expectation of success in reducing Xyrem by "at least 5%."

Further, the note revealed that PTAB has stated "(3) certain animal models show valproate could decrease Xyrem levels, meaning a skilled artisan would have had to perform further experimentation to determinate the appropriate Xyrem dose when prescribed along with valproate."

However, the analyst said though "the PTAB decision appears to be a near to medium-term win for JAZZ as it validates the ability of the IP to withstand obviousness based invalidity arguments, there remains some longer-term risk the patent could get invalidated in federal court where generics can raise a broader set of arguments."

But, Gerberry noted recent developments in REMS (risk evaluation and mitigation strategy) patent are positive for JAZZ.

The analyst elaborated, "Xyrem is protected by numerous patents covering its REMS distribution program. While the PTAB instituted proceedings on most of the REMS patents, the panel only partially instituted an IPR on patent '963."

He continued, "What stands out about '963 is that is has very narrow claims covering some of the specific process-oriented steps that weren't disclosed in the prior art, and specialists believe this will make '963 tougher to knock out in IPR vs. other REMS patents."

"As for the other (fully instituted) REMS patents, the MEDACorp specialists will be focused on 4/19 oral arguments where JAZZ could swing that case in its favor if it can successfully argue the FDA Adcom materials, cited as prior art by generic challengers, are inadmissible," Gerberry added.

Latest Ratings for ENDP

DateFirmActionFromTo
Feb 2017Canaccord GenuityInitiates Coverage OnBuyHold
Jan 2017JP MorganDowngradesOverweightNeutral
Jan 2017CitigroupDowngradesBuyNeutral

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Posted-In: Jason Gerberry LeerinkAnalyst Color Biotech News FDA Analyst Ratings General

 

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