A U.S. District Court ruled Monday that patents for one of Allergan PLC's best-selling drugs are invalid, potentially opening the door for generic competition.
Shares of the pharmaceutical company fell 4.9% to $196.70 during afternoon trading following the decision to invalidate four patents for Allergan's dry-eye drug Restasis. Allergan has said it plans to appeal the decision.
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Allergan took out the Restasis patents in 2013 as the drug began facing the threat of competition from generic versions. The company said the patents were supposed to last until 2024, while generic rivals argued the patents shouldn't have been granted in the first place and should be ruled invalid.
Mylan NV and Teva Pharmaceuticals Industries Ltd. are among the companies working on generic versions of Restasis, but they have yet to win federal approval. Allergan tried to stop them in part by asking the federal court in Texas to find the generic companies were infringing on the Restasis patents.
Allergan last month sold the patents for Restasis, its second-best selling drug after Botox, to a Native American tribe, in an attempt to shield them from a separate challenge before the U.S. Patent and Trademark Office. The tribe's sovereign status would exempt it from cases before the patent office. Allergan said its aim was to avoid the "double jeopardy" of defending Restasis patents in both federal court and the U.S. patent office.
Mylan criticized that move, calling it a "sham," and asked the federal judge court to prevent the tribe from joining the patent litigation before the district court.
Monday's ruling listed the Saint Regis Mohawk Tribe tribe as a co-plaintiff but said adding the tribe as a party didn't mean the court was acknowledging that the patent-rights transfer was valid.
"The Court has serious concerns about the legitimacy of the tactic that Allergan and the Tribe have employed," Judge William Bryson wrote in his decision.
Analysts at Wells Fargo said the impact of generic competition was largely already factored into the Allergan's current valuation, noting that the company's market value has lost nearly $9 billion since early September. Since generic versions haven't been approved yet, the bank estimates the earliest that Restasis may face competition in the market is in 2019.
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(END) Dow Jones Newswires
October 16, 2017 16:26 ET (20:26 GMT)