- Investors in Alexion Pharmaceuticals are now taking seriously the threat of a legal challenge from Amgen, sending shares down 8% Friday on unexpected news that the U.S. patent office will examine three patents held by the smaller biotech on its top-seller Soliris.
- Amgen filed for a so-called inter partes review of the three patents in February. On Friday, the U.S. Patent Trial and Appeal Board agreed to take up review, indicating it views Amgen's claims hold enough merit to begin formal proceedings.
- Most IPR challenges for life sciences patents fail. Still, Soliris accounted for 82% of Alexion's product sales in the second quarter, magnifying any risks to the drug's market position.
Last week, rumors Amgen might buy out Alexion buoyed shares higher, only to be dashed when Amgen announced Monday a deal to acquire Celgene's psoriasis drug Otezla (apremilast).
Now, the prospect of a tie-up between Amgen and Alexion looks even more remote, as patent litigation between the companies will move forward.
Among large-cap biotechs, Alexion is one of the most dependent on its top drug for revenue. The PTAB's decision Friday raises the possibility that sales of Soliris (eculizumab) could face competition sooner than expected — an unwelcome proposition for Alexion investors.
Alexion's main patent on Soliris, which treats two rare blood disorders, runs through 2021. The three patents Amgen is challenging extend that patent protection by another six years, until 2027.
That the PTAB chose to institute review of all three surprised analysts on Wall Street, who hadn't expected the patent court to buy into Amgen's case. Were the patents to fall, Amgen could have a clear path to taking on Soliris with a biosimilar version of the drug it's now developing.
Institution doesn't mean the patents will end up declared invalid, however. According to an expert cited by analysts at Stifel, the baseline rate of invalidation for patents in the life sciences field is between 20% and 35%.
And proceedings at PTAB will take some time, progressing through discovery and oral hearings to a written decision expected about 12 months from now.
Still, the PTAB review will weigh on Alexion and raise the stakes for its plans to convert patients from Soliris to its newer successor Ultomiris (ravulizumab).
"Alexion has multiple lines of defense against new competitors, including further patent litigation, orphan drug exclusivity and, most importantly, their product convenience-driven switch over to Ultomiris," wrote SVB Leerink analyst Geoffrey Porges in an Aug. 30 note to clients.
"With this news, it makes some of these strategies less viable, but still doesn't mean that an early biosimilar entry is inevitable, just that it is more potentially likely now than it was before."
Soliris is approved to treat two diseases, paroxysmal nocturnal hemoglobinuria, and atypical hemolytic uremic syndrome. Both are uncommon, but Alexion has been able to build a multi-billion dollar business out of Soliris, due in no small part to the drug's extremely high price.
Over the first six months of 2019, Soliris earned Alexion just under $2 billion in sales.