Heads up, Biogen. After digging into Tecfidera patent arguments, analyst predicts a loss

As Biogen preps for its closely watched aducanumab FDA filing in Alzheimer’s disease, a patent threat for the company’s top-selling medicine is causing concern for one team of analysts.

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In a note to clients Tuesday, Bernstein analyst Ronny Gal and his team downgraded Biogen’s stock—from outperform to market-perform—based on the belief that Mylan will win its patent lawsuit against Biogen’s Tecfidera.

The multiple sclerosis blockbuster only has one active patent left, and that patent survived a challenge from Mylan at the U.S. Patent & Trademark Office, Gal points out. But Mylan is separately challenging the patent in West Virginia federal court, and after reading a transcript of post-trial arguments, Gal’s team thinks Mylan is “likely to win" that case.

Biogen’s patent “does not clearly state the invention,” Gal believes. Further, Mylan was effective in arguing the drug invention “is not evident” from the description on the patent, Gal wrote. Several times, the judge overseeing the litigation said to Biogen she “has a problem” with the company’s arguments, Gal wrote.

“We read many court transcripts in the past 15 years and came to this one hoping for positive read for our outperform rating—but no, this one reads clearly negatively,” Gal wrote.

Tecfidera is Biogen’s best-selling medicine, generating $3.3 billion in the U.S. last year. The drug’s only patent remaining expires in 2028.

Meanwhile, the company is pressing ahead with its FDA application for aducanumab, with plans to file in the third quarter. The company’s filing delay—disclosed with first-quarter results—puzzled analysts, but execs cited the complexity of the application and COVID-19.

Jun 10, 2020


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