Shares in Biogen gained as much as 32% on Wednesday after the US Patent Trial and Appeal Board (PTAB) sided with the company by agreeing to uphold the patent covering its multiple sclerosis drug Tecfidera (dimethyl fumarate). Biogen will now be able to market Tecfidera, which generated $4.4 billion last year, accounting for about 30% of its total sales, until the patent expires in 2028.
Mylan had argued in an inter partes review filing that the patent should be invalidated because the active ingredient in Tecfidera has been known for years and that the dosage form was predictable. However, Biogen pointed to tests that showed the MS drug was not as effective at the 360-mg dose and only had a "modest" effect at 720 mg, with company lawyer Barbara McCurdy saying it was "stunning and unexpected" to discover that changing the dose to 480 mg "produces a strong, therapeutic effect."
The patent board agreed that there was "strong evidence of unexpected results," whereas it said Mylan had not "demonstrated by a preponderance of the evidence the unpatentability of claims" it challenged. In a statement, the drugmaker said it strongly disagreed with the PTAB decision and plans to pursue all options for appeal. Mylan added that it "continues to believe…Biogen's '514 patent is invalid and will continue its challenges in both the district court and the federal circuit to remove this patent from blocking generic competition to Tecfidera."
In the meantime, Mylan is "also challenging the validity of this patent in the District Court of West Virginia, with trial having started on February 4 and is ongoing, which includes grounds different from those that were considered by the PTAB."
Commenting on the news, Mizuho Securities analyst Salim Syed said Biogen's share jump highlights "how much of an overhang this news item has been." Meanwhile, Evercore analyst Umer Raffat suggested prior to the PTAB decision that many had been "waiting on the sidelines" until after the judgment to buy into Biogen, which is preparing to file its experimental Alzheimer's disease drug aducanumab for US approval. Following the ruling, Syed said the decision "provides an entry point perhaps for any aducanumab bulls waiting on the sidelines for this event to pass."
In its recent fourth-quarter results presentation, Biogen said its financial outlook for the year of sales between $14 billion and $14.3 billion, as well as earnings in the range of $31.50 to $33.50 per share, assumed no generic competition for Tecfidera in the US in 2020. CEO Michel Vounatsos also indicated the company planned to submit aducanumab for review to the FDA "as soon as possible," having previously said it planned to do so in early 2020. For related analysis, see ViewPoints: Biogen's three key points of contention.
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