J&J Falls After Failing to Block Generic Zytiga Cancer Drug

(Bloomberg) -- Johnson & Johnson fell the most since February after a U.S. appeals court refused to stop generic versions of its prostate-cancer drug Zytiga from entering the market.

The decision could cost J&J millions of dollars in sales for one of its best-selling products, gutting the market for the brand-name version of the blockbuster cancer drug. J&J was down 3.1 percent to $141.93 at 1:34 p.m. in New York, after earlier falling as much as 3.9 percent. The broader Standard & Poor’s 500 Health Care Index was little changed.

The U.S. Court of Appeals for the Federal Circuit twice this week rejected J&J’s request to prevent copycat versions from from being sold in the U.S. while the drugmaker appeals a trial judge’s ruling that invalidated a patent on the medicine.

The appeals court said the decision shouldn’t be seen as indicating which side will ultimately win. Arguments are scheduled for Jan. 24 in Washington. J&J said it will ask the Supreme Court for an emergency order to halt the copycat medicines.

While Zytiga generics could enter the market "anytime now," Wells Fargo analyst Lawrence Biegelsen says there’s a chance manufacturers would be willing to wait for a final appeals decision in 2019. SunTrust’s John Boris disagrees, and forecasts that generic drugmakers, including Amneal Pharmaceuticals Inc. in his coverage, will enter the market before year-end.

Zytiga had $1.4 billion in U.S. sales in the first nine months of the year, and the generic-drug makers had expected to begin sales in October. J&J and partner BTG Plc get an average of more than $5 million for every day they can prevent a competing medicine from entering the market.

Mylan NV, Teva Pharmaceutical Industries Ltd. and Hikma Pharmaceuticals Plc have all received final approval from the U.S. Food and Drug Administration, so the courts are the only thing preventing them from beginning sales, Mylan said in a Nov. 2 filing with the Federal Circuit.

Other generic-drug makers eager to begin selling copies of the medicine include Dr. Reddy’s Laboratories Ltd. and Amneal Pharmaceuticals Inc.

U.S. District Judge Kevin McNulty had ruled Oct. 26 that the patent for the use of the active ingredient of Zytiga with the steroid prednisone didn’t cover a new idea.

The Patent Trial and Appeal Board, using a different legal analysis, came to the same conclusion earlier this year. J&J and BTG have asked the agency to reconsider that decision.

The Federal Circuit, which specializes in patent law, will be the final arbiter of the patent’s validity, and a final decision is unlikely until next year.

For BTG, other news overshadows the Zytiga decisions and buoyed its stock. Boston Scientific Corp. said Tuesday it would buy the company for 3.3 billion pounds ($4.2 billion).

The case is BTG International Ltd. v. Amneal Pharmaceuticals LLC, 18-1147, U.S. Court of Appeals for the Federal Circuit (Washington).

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