3 Key Stocks To Watch Today: Illumina, Inc., Allergan, Inc., and Teva Pharmaceutical

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Good morning, fellow Foolish investors! Let's take a look at three health care stocks which could make headlines this morning -- Illumina (NASDAQ: ILMN  ) , Allergan (NYSE: AGN  ) , and Teva (NYSE: TEVA  ) .

Illumina's new machine illuminates the life sciences industry
Illumina, a manufacturer of life science tools and systems for genetic analysis, recently stunned the industry when CEO Jay Flatley announced on Tuesday a new high-end genome sequencing machine which could accurately sequence entire human genomes for less than $1,000 each.

This is a major game-changing development for the life sciences industry, since current methods of human genome sequencing cost $3,000 to $5,000 each.

The machine, known as the HiSeq X, will sell for $1 million each. However, one entire system consists of ten separate machines, bringing the minimum cost per installation up to $10 million. The system will start shipping in March, and customers such as Korean biotech company Macrogen, the Broad Institute, and the Garvan Institute of Medical Research have already placed orders.

The launch of HiSeq X has been likened to "breaking the sound barrier" in genome sequencing, putting Illumina well ahead of its chief competitor, Ion Torrent (acquired by Life Technologies (UNKNOWN: LIFE.DL  ) ), which had promised a $1,000 per sequence machine in 2012 but failed to deliver.

Illumina also introduced a cheaper, $250,000 sequencing system known as the NextSeq 500, which can perform more basic sequencing tasks for researchers and clinicians on tighter budgets.

These positive announcements came immediately after Illumina reported its preliminary, unaudited fourth quarter results.

Revenue came in at $387 million, topping the consensus estimate of $370 million. Looking forward, the company expects sales growth of 15% to 17% in fiscal 2014 to $1.54 billion, and non-GAAP adjusted EPS of $2.00 to $2.06 per share. Analysts, on average, had expected Illumina to report $1.6 billion in revenue and $2.05 in earnings.

Allergan's Lumigan will remain patent protected until 2027
Meanwhile, Allergan won a patent infringement lawsuit yesterday against Novartis, Actavis, Hi-Tech Pharmacal, and Lupin, after a U.S. court ruled against generic copies of its Lumigan 0.03% glaucoma treatment from entering the U.S. market until 2027.

Lumigan generated $452.7 million in sales over the first nine months of fiscal 2013, accounting for approximately 10% of Allergan's top line. Lumigan is Allergan's second best-selling eye treatment after its dry eye treatment Restasis, which faces a looming patent expiration in May. Restasis generated $662.4 million in revenue during the first nine months.

However, Allergan was recently granted several new patents for Restasis, which could keep generic competitors at bay for a little while longer.

Allergan is best known as the manufacturer of skin tightener Botox and various body aesthetic supplies for plastic surgeons. Last quarter, Allergan's revenue and earnings rose 13.2% and 20.2%, respectively, but the stock has underperformed the broader market due to uncertainties regarding its future after the loss of Restasis exclusivity.

Teva wins a legal battle to make generic OxyContin
Last but not least, Teva won a legal battle against Purdue Pharma, after a U.S. court found that Teva didn't infringe on any of Purdue's patents for the narcotic painkiller OxyContin. The court invalidated some of the six patents held by Purdue that were related to the drug.

However, the court found that Teva infringed on three of Purdue's patents, but was excused from liability since the patents were declared "obvious" and therefore invalid. This wasn't the first time Purdue sued another company over OxyContin -- last April, it sued generics giant Actavis over a generic version, which resulted in Actavis being granted a limited license to sell "defined quantities" of the drug.

OxyContin, a controversial drug due to its reputation for being crushed or dissolved for recreational uses, accounted for $2.81 billion of the $9.38 billion U.S. market for prescription painkillers in 2012. Both Purdue and Endo Health Solutions have been developing tamper-resistant versions of the tablet which cannot be crushed or dissolved.

Teva and Purdue are also developing a tamper-resistant version of hydrocodone, another narcotic painkiller which is roughly ten times as potent as Vicodin. Last December, Zogenix (NASDAQ: ZGNX  ) won a controversial FDA approval for Zohydro ER, a non tamper-resistant version of hydrocodone which prompted protests from over two dozen state prosecutors.

Nonetheless, the ruling against Purdue is a rare positive development for Teva, which has been struggling to face upcoming generic competition for its MS drug Copaxone, which accounts for a fifth of its revenue, and the abrupt resignation of its CEO Jeremy Levin after a dispute with the board.

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