The U.S. Patent Office's Patent Trial and Appeal Board will review Amgen Inc.'s challenge of Alexion Pharmaceuticals Inc.'s patents on its flagship rare disease drug, Soliris, surprising some analysts who had been tracking the dispute.
Amgen, which is evaluating a biosimilar version of Soliris in late-stage trials, is challenging all three of Alexion's key Soliris patents and filed petitions to the Patent Trial and Appeal Board, or PTAB, in February 2019. The petitions were granted Aug. 30, meaning the PTAB will institute an inter partes review to evaluate the validity of certain patents. The inter partes review process was created under a 2011 law and is intended to be a speedier option to challenging patents in the courts.
Alexion's stock was trading down approximately 11.4% to $99.35 as of 11:03 a.m. ET.
Amgen's petitions challenged Alexion's secondary patents covering the composition of Soliris' active ingredient, eculizumab, the medicine's formulation, and its use to treat certain diseases. The secondary patents extended Soliris' exclusivity from 2022 to 2027.
Leerink analyst Geoffrey Porges noted his surprise at the PTAB's decision to review Amgen's challenge: "We and consensus largely viewed these patents as valid and enforceable in the U.S.," he wrote on Aug. 30.
Porges said the PTAB will likely issue a decision on the patents' validity in the third fiscal quarter of 2020.
"Between now and then, Alexion's stock is likely to exist in a depressed state until this [inter partes review] gets to clarity," Porges wrote.
Soliris is an immunosuppressive drug that treats rare blood disease paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome, another rare disease that causes abnormal blood clots in the kidneys. Soliris also treats the autoimmune neuromuscular disease myasthenia gravis, characterized by weakness and muscle fatigue, and a certain form of rare central nervous system disease neuromyelitis optica spectrum disorder, which results in damaged optic nerves and spinal cord.
Porges expects Soliris' U.S. sales to reach $1.8 billion in 2022, according to an Aug. 29 note.
Alexion is switching patients to its next-generation version of the drug, called Ultomiris. Alexion has said during earnings calls that it plans for 70% of Soliris patients to switch to Ultomiris by the end of 2020.
"The bull case is that Ultomiris renders [Alexion] essentially unexposed to a Soliris biosimilar, but this remains an open question," Stifel analyst Paul Matteis commented in an Aug. 21 note.
Alexion will also receive a decision in September from the European Patent Office on Soliris' EU exclusivity through 2027. The European Patent Office will hold a hearing on the matter on Sept. 5, after which a published decision is expected within two to three weeks, according to Matteis.
Matteis, as well as Leerink's Porges, said expectations are low for a positive decision in Europe. As such, biosimilar entry in the EU expected in mid-2023, and EU Soliris sales will likely decline 20% to 40% from 2023 to 2027, Porges wrote in an Aug. 29 note.
