(ticker: BIIB) stock is trading down on Thursday following a setback related to a patent on one of the drug maker’s products.
The Back Story. The issue stems back to July 2018, when
(MYL) filled an inter partes review (IPR) for Biogen’s “514 patent,” the drug maker’s treatment patent on Tecfidera. Tecfidera–taken by adults with relapsing multiple sclerosis–is a $4 billion drug, so it’s no small potatoes for Biogen’s sales. While other patents for the drug have already expired or are about to, the patent that Mylan is questioning is a longer-term one, not set to expire until 2028, hence the investor concern. (Mylan, a generic-drug maker, has an incentive to get various treatment patents removed so the company can make its own versions.)
The Plot Twist. While Mylan raised the issue more than half a year ago, late Wednesday the IPR was instituted, which led to Biogen’s shares dropping in late trading, and the shares are falling again on Thursday. (Mylan isn’t faring much better, although that may be more due to the general market downturn this afternoon than the news.)
Moving Forward. The news hasn’t done much to deter Biogen bulls. Evercore ISI’s Umer Raffat reiterated an Outperform rating on the shares, writing that Biogen “actually has a good shot at winning” given that Mylan has more of an uphill battle in making its case, and that the judge in the case has set a high bar for the latter’s evidence.
Likewise, Mizuho’s Salim Syed reiterated a Buy rating and $427 price target on the stock, writing that while the development presents risks, and historical IPR data indicates Biogen has probably a 31% chance of losing the patent protection, in reality that figure could be much lower for two reasons. First, there’s the fact that Tecfidera has already triumphed in past intellectual-property litigation, and secondly, as the petitioner, the onus is on Mylan to win all of the 20 claims related to this dispute; Biogen needs only to win one claim to be successful.
Even if the bulls are right, however, don’t expect any swift vindication for Biogen, as the case likely won’t reach a conclusion until 2020.
Biogen is down 5.5% to $314.87 in recent trading.
Write to Teresa Rivas at firstname.lastname@example.org