Could This Patent Decision Surprise Teva Bears?

Morgan Stanley’s David Risinger maintained an Overweight rating on Teva Pharmaceutical Industries Ltd (ADR) (NYSE: TEVA), with a price target of $71.

U.S. Patent Decision Unpredictable

Although both the analyst’s and the consensus expectations are for the U.S. Copaxone 3TW patents to become invalidated nu 3Q16, Risinger pointed out that the EU decision to uphold the Copaxone 40mg patent in December 2015 could impact the U.S. decision.

The U.S. Patent Board is expected to give its decisions on three patents by August 25, 2016. Any generic launch would need to wait until the 30-month stay expired on February 6, 2017. This could be further delayed by Teva Pharmaceutical’s court appeals in the event that the 40mg patent is invalidated.

Related Link: Kerrisdale Capital Short Thesis On Sage Therapeutics: Lead Drug "Likely To Fail" In Phase 3

Risinger mentioned that discussions with a patent attorney suggested that “there was an outside chance that Teva could succeed, mainly based on the argument that Copaxone is a complex compound without a clear dosage-activity relationship.”

EU Upheld Patent

The European Patent Office (EPO) had “surprisingly” upheld the Copaxone 40mg patent, mentioning that the patent was novel, since earlier an every other day dosing schedule was followed, which was different form the three doses a week schedule for Copaxone.

“Furthermore, because the pharmacokinetic and pharmacodynamic profiles of Copaxone are not well understood, the EPO believes it was not obvious for a skilled person to double the dose and to use a three times a week dosing schedule,” Risinger explained.