Merrill Lynch analyst Gregg Gilbert would "not be surprised" if Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) were to launch a generic version of Wyeth's gastro-esophageal reflux disease (GERD) treatment Protonix. He also does not rule out a settlement between Teva and Wyeth. In a recent report, Merrill Lynch also maintains its "Neutral' rating on Teva.
Merrill Lynch reviewed a New Jersey court opinion on the denial of Wyeth’s motion for a preliminary injunction seeking to block Teva or Sun Pharmaceuticals from launching a generic version of Protonix. Based on the court's ruling, Merrill Lynch analysts "do not expect Teva to telegraph what it intends to do any time soon, and do not see a need for Teva to act quickly". In any case, the investment bank notes that the "longer-term value of the opportunity, as measured by the net present value, would not be very significant relative to the company's market cap".
Merrill Lynch explains that "The court tests four factors in determining whether to grant a preliminary injunction: whether the movant has shown a reasonable probability of success on the merits; whether the movant will be irreparably harmed by the denial of injunctive relief; whether injury to the movant (if a preliminary injunction is not granted) outweighs harm to non-movant (if preliminary injunction is granted); and the public interest impact of the preliminary injunction. While the last two factors were not considered in this case, the opinion states that the plaintiffs (Wyeth and Altana) “have failed to establish a likelihood of success on the merits,” and that the plaintiffs have not established irreparable harm." The court points to Protonix’s contribution to Wyeth’s profits (8.8% of profits) as a basis for its decision.
Merrill Lynch also points out that "The court ruling noted that "the parties are now permitted to launch generic versions of Protonix upon obtaining the requisite approval."
The brand product of Protonix has annual sales of approximately $2.5 billion in the United States.
Teva trades on Nasdaq with a market cap of around $33.2 billion. Its shares closed on Friday at $43.56.
Published by Globes [online], Israel business news - www.globes.co.il - on September 16, 2007
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