Some more color:
Teva Gets U.S. High Court Hearing on Generic Copaxone Delay (4)
2014-03-31 21:02:23.986 GMT
(Updates with closing share prices in fifth paragraph,
Mylan comment in 12th paragraph.)
By Greg Stohr and Susan Decker
March 31 (Bloomberg) -- The U.S. Supreme Court agreed to
hear an appeal by Teva Pharmaceutical Industries Ltd. in a move
that may delay generic competition to the company’s top-selling
Copaxone multiple-sclerosis drug and alter how patent appeals
are handled. Teva rose on the news.
The justices today said they will hear Teva’s bid to revive
a patent that would protect Copaxone from generic rivals until
September 2015. Without that patent, Teva would lose legal
protection this May on Copaxone, which brings in $3.2 billion in
annual U.S. sales and accounts for more than half its profit.
High court review is a setback to drugmakers that were
planning to offer generic versions in May: Momenta
Pharmaceuticals Inc., which has developed a version with
Novartis AG’s Sandoz, and Mylan Inc. Should those companies
press ahead with their plans, they will be at risk of having to
compensate Teva for lost sales if the company wins its Supreme
Court appeal.
“The generic filer will have to think if it wants to
launch before the case is settled and run the risk of paying
large fines,” said Ori Hershkovitz, a managing partner at
Sphera Funds Management Ltd. in Tel Aviv, which holds Teva
shares.
Shares Rise
Teva American depositary receipts, each representing one
ordinary share, rose $3.39, or 6.9 percent, to $52.84 in New
York trading. That represented the biggest one-day percentage
rise for the ADRs since Aug. 9, 2011. Momenta fell 16.9 percent
to $11.65 and Mylan was unchanged at $48.83.
The court will hear arguments and rule during its 2014-15
term, which starts in October and runs through the following
June. Any delay in generic-drug competition would be a windfall
for Teva, which collects $8.8 million a day from its blockbuster
drug. Copaxone already is facing competition from Biogen Idec
Inc.’s Tecfidera treatment.
While Hershkovitz said he thought the generic-drug
companies would be willing to risk going to the market, Jonathan
Kreizman, an analyst at Bank of Jerusalem, disagreed, saying,
“Teva has a good case with the particular patent.”
Teva, based in Petach Tikva, Israel, said in a statement
that it’s “pleased that the court has agreed to hear its
appeal” and it “remains committed to pursuing all options to
protect its intellectual property for Copaxone.”
Novartis, Momenta
Novartis AG, based in Basel, Switzerland, said it believes
the patents are invalid.
“Together with our collaboration partner Momenta, we look
forward to marketing an affordable, high-quality generic version
of Copaxone at the earliest possible opportunity,” said Julie
Masow, a spokeswoman for Novartis.
Momenta, based in Cambridge, Massachusetts, had no
immediate comment.
Mylan said in a statement that its 2014 earnings estimates
hadn’t changed. The company, which is based in Canonsburg,
Pennsylvania, didn’t say whether it would start selling a
generic version before the Supreme Court ruled.
A ruling last year by the U.S. Court of Appeals for the
Federal Circuit upheld four Teva patents that expire in May
while invalidating a separate patent that would have blocked
generic competition until September 2015.
The appeals court, reversing a trial judge, said the
invalidated patent didn’t clearly outline what Teva claimed was
invented. The patent contains ambiguities that make it unclear
what molecular weights were used to develop the product, the
court ruled.
Overturning Judges
In its Supreme Court appeal, Teva argued that the Federal
Circuit, which specializes in patent cases, should have deferred
to a trial judge’s reading of the patent.
The Federal Circuit’s longstanding approach is to review
patents without giving any weight to the trial judge’s
interpretation. In February, a divided 6-4 court affirmed that
policy in another case, which may have led to the high court
taking this case, said David Long, a patent lawyer with Kelley
Drye in Washington.
The definition of a term or phrase in a patent is key to
all that follows in a case, be it legal arguments over its
validity or presentation to a jury of what the patent covers.
The appeals court overturns patent interpretations by trial
judges 32 percent of the time, according to a study published in
September by American University Professor J. Jonas Anderson and
University of California at Berkeley Professor Peter Mennell.
‘Foundational Question’
“It goes to the heart of patents: What does the patent
cover and, more specifically, who decides that issue,” Long
said. “Whatever the Supreme Court decides will impact all
industries -- mobile phones to pharmaceuticals -- because the
value of any patent depends on what it covers.”
Teva argued that the interpretation of patents is “a truly
foundational question” of such litigation, and the Federal
Circuit’s policy injects uncertainty in every case. Had the
appeals court considered only whether the judge had “clearly
erred,” the patents would have been upheld, Teva said.
Momenta, Sandoz and Mylan all urged the Supreme Court to
reject the appeal without a hearing.
Meanwhile, Teva is trying to switch patients over to a 40-
milligram dose of Copaxone before the 20-milligram generics hit
the market. The smaller dose must be injected daily, compared
with three times weekly for the 40-milligram dose.
In November, Chief Justice John Roberts refused to put the
Federal Circuit ruling on hold while the high court decided
whether to take up Teva’s appeal.
The case marks a trend in which the Supreme Court has taken
a greater interest in patent law as Congress considers
legislation to deal with certain litigation practices. Earlier
today, the high court heard arguments on whether software is
eligible for patent protection. It also is considering when the
loser in a patent case should pay the winner’s legal fees.
The case is Teva v. Sandoz, 13-854.
