The Supreme Court's decision against Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) request to block a potential launch of generic Copaxone pending the outcome of the hearing on the patent later this year is not surprising, says Citi Research in response to the Supreme Court's decision on Friday, adding that it's investment thesis remains unchanged. "Our recent legal due diligence… suggested a low probability of success of Teva’s request to block the potential launch of generic versions of Copaxone," a note to Citi clinets states.
"Notwithstanding the Court’s decision to effectively allow an 'at-risk' launch of generic Copaxone as of the end of May 2014 (if approved), our bullish stance remains unchanged, and we view the potential impact of an at-risk launch as minimal pending the outcome of the Supreme Court hearing (expected in the Feb-June 2015 time frame). Teva remains our preferred name in the US spec pharma/generics universe and is on Citi’s US Focus List," the Citi analysts write.
"We remind investors that any potential launch of generic Copaxone prior to resolution of the Supreme Court hearing and a final decision regarding the validity of the ‘808 patent would be 'at risk’, implying substantial damages to be paid by the generic companies if the ‘808 patent is ultimately rendered valid by the Court. The high profitability of Copaxone … suggests a low likelihood of an at-risk launch, in our view. Moreover, in the case that any generic company chooses to launch at risk (assuming approval), it is likely that generic Copaxone will likely be priced at a minimal discount or at parity to the brand, in order to mitigate the risk of future potential damages, implying lack of incentive for payors or physicians to utilize the generic," the ana;ysts conclude.
Barclays Capital is also not perturbed by the Supreme Court decision, saying, "Teva can take solace in Chief Justice Robert’s comment that Teva had demonstrated 'fair prospect of success on the merits' in the case, which could extend Copaxone’s patent protection to September 2015." It adds, "However, we think it is unlikely that the generics will launch at risk if approved by the FDA, which is by no means a certainty."
Published by Globes [online], Israel business news - www.globes-online.com - on April 22, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014