A district court judge ruled in favor of Amgen Inc. in a decision that protects the company's arthritis and psoriasis drug Enbrel from Novartis AG's competitive copycat.
Judge Claire Cecchi of the U.S. District Court of New Jersey decided that Novartis' generic unit Sandoz had "failed to show by clear and convincing evidence that the patents-in-suit are invalid."
Novartis needed to prove that seven patents protecting the branded Enbrel were invalid so the Swiss company could market its version of the drug named Erelzi, called a biosimilar because it is a comparable copy of a complex biologic compound.
The ruling was expected to be a landmark case in the formation of biosimilar law, which is still rather new from the 2009 Biologics Price Competition and Innovation Act, or BPCIA.
Novartis announced after the ruling that it would appeal the decision.
"Sandoz respectfully disagrees with the court's ruling, which prevents us from launching an additional treatment option for patients with autoimmune and inflammatory diseases," Sandoz U.S. President and Head of North America Carol Lynch said in an Aug. 9 release. "Valid intellectual property should be respected; however, we continue to consider the patents in this case to be invalid."
Amgen CEO Robert Bradway also touted the importance of intellectual property.
"We are pleased with today's decision recognizing the validity of these patents," Bradway said. "Protecting intellectual property is critical to incentivize innovation and the large investments in research and development that are required to bring new medicines to patients and fully develop their therapeutic potential for patients."
Thousand Oaks, Calif.-based Amgen obtained the U.S. rights to Enbrel from Roche Holding AG, and the license to the patents played an important role in the judge's decision, Evercore ISI analyst Umer Raffat said in a note. Wyeth, a company Pfizer Inc. acquired in 2009, owns the rights outside of the country.
"While this topic may remain an issue into [the] appeals process, I do want to point out how Judge Cecchi approached it: she specifically pointed out that Enbrel's ex-U.S. rights were sold to Wyeth as an 'assignment' whereas Enbrel's U.S. rights were sold as a 'license,'" Raffat said. "That marks a clear distinction."
Enbrel made over $7 billion in sales in 2018, netting Amgen $5 billion and Wyeth the rest.
From a consensus point of view, Raffat said if the ruling holds up, it would revise Amgen's estimates by $200 million to $500 million, depending on pricing and volume erosion moving forward.
"From a stock perspective, this marks a major overhang removal for the year," Raffat said. "Although I acknowledge Sandoz is appealing — and we can get a decision by mid-2020."