- Biogen shares were up by as much as 30% Wednesday afternoon, representing a swing in market value of more than $15 billion, on news a patent court had ruled against a challenge to the biotech's top-selling drug.
- In early 2019, generics giant Mylan asked the United States Patent and Trade Office to review a patent on Tecfidera, a multiple sclerosis medicine that accounts for almost 40% of Biogen's revenue. At the time, the office said there was a "reasonable likelihood of success" that Mylan could prove at least one of the 20 claims in the patent, called '514 for short, is unpatentable.
- However, the trial board responsible for reviewing Mylan's case determined all 20 claims in '514 are patentable, potentially allowing Biogen's monopoly on Tecfidera to run through 2028, when '514 expires in the U.S.
Losing patent protection on Tecfidera (dimethyl fumarate) would have been a big problem for Biogen, and not just because of the $4.4 billion the drug fetches annually.
Tecfidera provides stability for Biogen as it works through challenges in other parts of the business.
The company's spinal muscular atrophy drug Spinraza (nusinersen), despite being a blockbuster, is starting to feel the effects of Novartis' gene therapy competitor, Zolgensma (onasemnogene abeparvovec).
On the research side of its business, Biogen's had more misses than hits with its high-risk, high-reward neuroscience bets. Though the company plans on asking regulators to clear what could be the first disease-modifying drug for Alzheimer's disease, controversial clinical results mean an approval is anything but certain.
Biogen does have in its arsenal a Tecfidera follow-on called Vumerity, but the drug only recently entered the U.S. market. In the fourth quarter Vumerity achieved $5.5 million in revenue, though Biogen noted that Tecfidera "remains front and center in our promotion."
The Patent Trial and Appeal Board's decision, therefore, removes a "major overhang" for Biogen, according to Michael Yee of Jefferies. The analyst recently broke down how several events could affect Biogen's share price, and estimated a positive outcome from the patent review could raise the price between $23 and $28, to sit at $305 to $310 apiece.
Wednesday afternoon trading sent Biogen shares as high as $374 apiece, before falling back to around $330.
"Investors have always been somewhat wary on giving [Biogen] full credit on its Tecfidera [intellectual property] because fumarates have been around from some time," Mizuho Securities analyst Salim Syed wrote in a Feb. 5 note. "Well now, on this third win, we'd argue the full extent of IP credit ... should become the new consensus."
In its ruling, the PTAB determined one of Mylan's key arguments — that claims in '514 can't be patentable because of obviousness — didn't hold up.
"Mylan strongly disagrees with the decision and plans to pursue all available options for appeal," the company said in a statement.
Mylan is challenging the Tecfidera patent in the District Court of West Virginia too. A trial there began Tuesday, Feb. 4. There are also parties challenging '514 though the District Court of Delaware.
"Mylan continues to believe, based on the law and the facts, that 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," the company said.