Biotech Values

[DewDiligence]

MNTA surges on Lovenox ruling:

[The huge MNTA spike may be an overreaction for two reasons: 1) SNY might yet prevail on appeal; and 2) MNTA might not have the only generic Lovenox. MNTA contends that Lovenox is so difficult to make that no one else can do it right, but this assertion probably includes a modicum of hyperbole.]

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh04390_2005-06-16_20-53-02_l16...

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U.S. court invalidates patent on Sanofi's Lovenox

Thu Jun 16, 2005 04:53 PM ET
By Caroline Jacobs and Ben Hirschler

PARIS/LONDON, June 16 (Reuters) - A U.S. court has invalidated the patent on Sanofi-Aventis's ( SNY ) Lovenox blood thinner, clearing the way for generic firms to try and market rival versions of the drug.

Shares in the world's third largest drugmaker fell more than 5 percent on Thursday following the news.

Sanofi said that a court in California, in a summary judgment, had accepted an inequitable conduct claim by Amphastar Pharmaceuticals Inc. in the case.

The decision also clears the way for regulatory approval of a generic version of Lovenox made by Cambridge, Massachusetts-based Momenta Pharmaceuticals Inc. ( MNTA ) Momenta's shares rose 63 percent to close at $16.50 on Nasdaq.

The French drugs giant said it planned to appeal the decision, which is a setback to attempts to protect its core pharmaceutical business from generic competition, and vowed to fight to protect the Lovenox patent.

Momenta's version of Lovenox is likely to be the only generic approved by U.S. regulators, CIBC World Markets analyst Matt Geller said in a report on Thursday. He put the drug's sales potential at $1 billion a year.

Sanofi-Aventis spokesman Jean-Marc Podvin declined to comment to what extent the company's profit could suffer from possible generic competition to Lovenox, should the U.S. Food and Drug Administration approve copy-cat versions.

"It is in the hands of the FDA," he said.

EARLIER THAN EXPECTED

Investors had been braced for the possibility of generic competition to Lovenox at some stage, but the news came earlier than expected. U.S. sales of Lovenox totalled 1.14 billion euros ($1.4 billion) in 2004. [It is SNY’s second-biggest drug after Plavix.]

Mark Purcell of Deutsche Bank in London said he had been predicting that sales of Lovenox in the United States would reach 1.3 billion euros this year, equivalent to some 5 percent of group sales and close to 9 percent of profits.

"Clearly the patent has been invalidated due to inequitable conduct, and that clears the way for a generic company to copy the process described in that patent to try and produce Lovenox," he said.

"However, it doesn't mean to say that the FDA (Food and Drug Administration) is going to approve that product."

Because Lovenox is a complex mixture of chemical ingredients, it may not be easy for a generic company to produce an identical compound.

As a result, Purcell said that generics were unlikely to take more than half of the market and would not be able to slash prices as much as with conventional small-molecule drugs.

Aventis, bought by Sanofi-Synthelabo last year, began suing Amphastar and Teva Pharmaceuticals USA ( TEVA ) in 2003, hoping to block them from selling copycat versions of Lovenox in the United States.

The case had been expected to go to trial in November 2005 and news of the summary judgment took investors by surprise.

"This is an early surprise for us and, I think, for the company as well," said Michael Leacock, analyst at Nomura. "The patent was due to expire in February 2012, so effectively the company could lose six years of revenue and profit."

Shares in Sanofi have been the stars of the European sector this year, hitting record highs earlier this month on hopes for its experimental anti-obesity pill Acomplia.

But patent threats have always loomed in the background.

In addition to Lovenox, generic drugmakers are also out to make cheaper copycat versions of Sanofi's blood thinner Plavix, one of the world's top five best-selling medicines, and allergy drug Allegra.

Sanofi's sleeping pill Ambien, meanwhile, goes off patent as early as 2006 and faces new rivals.
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