Citi Alert: Copaxone Claims Construction Ruling Favors Teva
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>Conclusion: Judge Jones for the US District Court for the Southern District of New York (SNYDC) announced its patent claims construction ruling largely favoring Teva’s broader interpretation on major claims in its consolidated Copaxone patent infringement case against MYL/Natco & Sandoz/Momenta. This includes its definitions of “copolymer-1” and “average molecular weight” (see Figure 1). The court denied MYL’s motion for summary judgment of invalidity (due to indefiniteness), which follows an earlier denial (on 9/7/10) of Sandoz’s motion for summary judgment of indefiniteness. We believe these findings strongly support Teva’s arguments leading into its Sept. 7 th invalidity and non-infringement patent trial, as the claims construction interpretation appears to be the cornerstone of the upcoming trial (see our earlier 1/20/10 note). While the SNYDC has not yet ruled on the inequitable conduct trial (which ended on 7/22), we expect Teva to prevail. Our model assumes U.S. Copaxone sales of $2.82B in 2011E, growing to $3.14B in 2013E, and then declining to $2.84B in 2014E (LOE on 11/24/14, assuming 6-month pediatric exclusivity). We believe that Teva offers compelling value at its currently multiple of 6.5x our 2012E NEWCO (including Cephalon) EPS vs. its median forward P/E of ~14x over the last 5yrs. We maintain our estimates & Buy rating. <
