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Novartis (NVS) to Appeal to Supreme Court for Gilenya Patent

Novartis NVS plans to file a petition in the U.S. Supreme Court to uphold the validity of the Gilenya (fingolimod) dosing regimen patent.

This comes after the U.S. Court of Appeals for the Federal Circuit (“CAFC”) denied its petition to rehear the negative decision regarding the validity of U.S. Patent No. 9,187,405, covering a dosing regimen for 0.5mg Gilenya.

Gilenya is approved for relapsing-remitting multiple sclerosis (RRMS).

The ruling will allow HEC Pharma to launch its generic version of the drug.

We remind investors that the U.S. District Court for the District of Delaware issued a favorable decision in 2020, and a permanent injunction was granted against HEC Pharma until the expiration of the ’405 patent in December 2027 (including pediatric exclusivity). HEC Pharma was the only remaining abbreviated new drug application (ANDA) filer challenging this patent.

Novartis had earlier entered into settlement agreements with a number of ANDA filers. Per the agreements, the ANDA filers would have been able to launch a generic version of Gilenya upon FDA approval on an agreed-upon date prior to the expiration of the dosing regimen patent or earlier, under certain circumstances.

In January 2022, a three-judge panel of the CAFC issued a decision upholding the validity of the dosing regimen patent. Thereafter, HEC Pharma filed a petition for rehearing with the CAFC. In June 2022, a modified panel from the CAFC issued a reversal of its previous decision and found the patent invalid.

Novartis expects its 2022 top line to be negatively impacted by $0.3 billion if Gilenya loses exclusivity and generics enter the market. Nevertheless, it expects sales and core operating income growth for 2022 in the mid-single digit range in constant currencies.

Gilenya is one of the top drugs for Novartis and contributed $1.2 billion in sales in the first half of 2022.  An earlier-than-expected entry of generics in the United States will be detrimental to the drug’s contribution to overall growth as the sales in the county have already been steadily declining due to competitive pressures.

Shares of Novartis have lost 12.7% so far this year compared with the industry’s decline of 6.5%.

 

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Novartis is now looking to focus on strengthening its solid position in five core therapeutic areas (Hematology, Solid Tumors, Immunology, Neuroscience and Cardiovascular), strength in technology platforms (Gene Therapy, Cell Therapy, Radioligand Therapy, Targeted Protein Degradation and xRNA) and a balanced geographic footprint following a decision to spin off its generic business.

In April, Novartis announced a new organizational structure to accelerate growth, strengthen its pipeline and increase productivity.  The changes are expected to generate SG&A savings of $1.5 billion (the previous target of $1 billion) to be fully embedded by 2024.

In 2021, Novartis sold its 33% stake in Roche RHHBY for $20.7 billion. The company has been a shareholder of RHHBY since May 2001. NVS initiated a share buyback of up to $15 billion, of which $9.4 billion remains. The buyback is funded through the proceeds from the sale of 53.3 million shares of Roche.

Novartis is likely looking for strategic acquisitions in the pharma space using the cash proceeds from its stake sale in Roche.

Novartis carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the sector are Sanofi SNY and Bolt Pharmaceuticals BOLT. Both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings estimates for Sanofi are up 4 cents each for 2022 and 2023. Sanofi surpassed estimates in all of the trailing four quarters, the average being 9.37%.

Loss estimates for BOLT have narrowed to $2.25 from $2.87 in the past 60 days. BOLT surpassed earnings in three of the trailing four quarters, the average being 2.39%.


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