The Endo a Patent?

Patent infringement lawsuits are not unusual in the pharmaceuticals industry, but when they concern a drugmaker's second most-important branded drug, the results from the lawsuit are critical.

On Friday, Endo Pharmaceuticals (Nasdaq: ENDP  ) and Penwest Pharmaceuticals (Nasdaq: PPCO  ) sued generic-drug maker Actavis after Actavis filed an FDA marketing application for a generic version of their Opana ER pain medication.

After its Lidoderm pain patch, its Opana Extended Release compound is undoubtedly Endo's most important drug. Last year Opana (and its immediate-release cousin) accounted for almost 10% of Endo's revenue and were its fastest growing products with sales of $107 million.

Endo's Opana ER tablet has been approved by the FDA only since the middle of 2006, but the predecessor, Opana immediate-release injection, has been sold for nearly half a century. I'm not a patent lawyer so I can't speculate on the outcome of this case (here are Endo's FDA listed patents for Opana ER), but many controlled-release drugs like Sanofi-Aventis' (NYSE: SNY  ) Ambien CR have had their patents challenged by generic-drug makers such as Barr Pharmaceuticals (NYSE: BRL  ) in recent years.

Endo's patent infringement suit triggers a 30-month FDA stay on deciding whether to approve Actavis' Abbreviated New Drug Application (ANDA). The FDA won't approve any generic versions of Opana ER before this 30-month period unless the patent infringement litigation ends sooner, which is unlikely. Even after the stay on Actavis' ANDA, it won't be able to launch a generic version of Opana ER without the risk of having to pay a significant penalty if it later loses the case. 

Endo and Penwest have FDA marketing exclusivity on Opana ER until the middle of next year and patents that expire in 2013 and 2022. I'd be a little surprised if Endo thought it could get away with marketing Opana ER until 2022 and it's the 2013 patents that are at the heart of the Actavis and Endo patent lawsuit.

Any loss of Opana ER before 2013 would be a big blow to Endo's near-term growth prospects, so the progress of this case will be monitored closely by all Endo investors.


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