Deutsche Bank Comments on Shire (SHPG) Lialda Litigation

March 28, 2014 1:26 PM EDT Send to a Friend
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Deutsche Bank analyst Mark Clark commented on Shire (NASDAQ: SHPG) Lialda litigation. Shares traded lower after an appeals court sent litigation back for further proceedings.

"Watson/Actavis appealed this ruling and a Federal Appeals Court has today reversed the ruling, having disagreed with some of the patent claim definitions (‘constructions’) agreed in the District Court, and remanded the case “for further proceedings”, ie, sent it back to District Court to be heard afresh. Crucially the Appeal Court does not overturn the original decision in favour of the validity of the ‘720 patent. Thus the further litigation will be decided on whether Watson/Actavis infringe the patent," said Clark.

"The '720 patent on Lialda runs to June 2020 and unless generic challengers are shown to (a) not infringe the patent and (b) meet FDA bioequivalence standards (see below) then Lialda will not face generics before its patent expiry. The fact Watson/Actavis can now litigate afresh does not necessarily mean they will win the next round, merely that the Appeal Court disagreed with some of the definitions used in the District Court case. Additionally, during the course of the District Court trial, data was disclosed on Watson/Actavis’ putative generic which Shire believes would not meet FDA bioequivalence guidelines. Thus it is Shire’s belief (and it claims that of independent experts) that, even if Watson/Actavis is ultimately determined not to infringe its patent, the FDA will not be in a position to approve its generic. The three other generic challengers (Zydus Cadila, Mylan, Osmotica) each have different formulations of their putative generics and thus will separately have to go through non-infringement litigation and FDA review," he added.

Deutsche Bank has a Buy rating on Shire (NASDAQ: SHPG)

For an analyst ratings summary and ratings history on Shire click here. For more ratings news on Shire click here.

Shares of Shire closed at $151.30 yesterday.

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