LPCN: Summary Judgment Spurns Lipocine

By John Vandermosten, CFA

NASDAQ:LPCN

Hopes for Lipocine Inc. LPCN to secure damages from Clarus related to the ongoing patent infringement lawsuit patents faded on Tuesday. On May 25, the US District Court for the District of Delaware granted Clarus Therapeutics a motion for summary judgment against the patents in the suit advanced by Lipocine in the patent infringement case. Judge William Bryson found all of the asserted Lipocine patent claims invalid noting that Lipocine's claims were not specific enough and lacked sufficient written description.¹

Clarus's motion for Summary Judgement proposed that there was a clear, straightforward outcome for the suit and it would only require Judge Bryson to rule on the decision, not a jury. The judge's decision found Lipocine's patents lacked description and enablement, or in other words, that Lipocine's patents used language that was too broad to make a case for infringement.

Lipocine's patent claims for Lipocine's U.S. patents 9,034,858; 9,205,057; 9,480,690; and 9,757,390, were all found invalid. Federal Circuit Judge William Bryson, Senior Circuit Judge of the U.S. Court of Appeals for the Federal Circuit made the call. Clarus' defense of inequitable conduct remains pending.

Lipocine has 21 days to decide what their next steps will be. In a press release, Lipocine CEO Dr. Mahesh Patel believes "the ruling is contrary to the establish law of Section 112" and is "in the process of…determining next steps." We will update investors as more information is made available.

Dismissal of the patent infringement suit represents a sunk cost for Lipocine. However, we had not forecasted any benefit from these proceedings and maintain our Tlando timeline.

The summary judgment does not affect the anticipated commercialization calendar for Tlando, which we continue to anticipate will begin first sales in March 2022.²  The testosterone replacement therapy was granted tentative approval by the FDA on December 8, 2020. Tlando met all required quality, safety and efficacy standards necessary for approval; however, final approval will not be granted until the expiration of Jatenzo's exclusivity period. Jatenzo was granted a three year period of exclusivity on March 27, 2019.

A patent interference case is also ongoing between Lipocine and Clarus which alleges that Clarus' Jatenzo infringes upon four of Lipocine's patents. This case is before the US Patent and Trademark Office (USPTO). Two previous interference cases have been decided in Lipocine's favor (106,045 & 106,120). One case (106,128) was withdrawn by the USPTO. The ultimate disposition of the interference cases will be finalized in the undetermined future.

While the outcome was not what we were hoping for, it does not change our timeline for Tlando commercialization or the development path for LPCN 1144 in non-alcoholic steatohepatitis (NASH), which are the key drivers for our valuation. See our latest report for details on our valuation, active studies and other recent events.

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1. We did not have access to primary resources and relied on management commentary and notes in the press for the judge's rationale. The details of the case remain sealed as of the date of this note.

2. TLANDO has not received final approval and is not eligible for final approval to market in the U.S. until the expiration of the exclusivity period previously granted to Clarus Therapeutics for Jatenzo, which expires on March 27, 2022.