Shares of Emergent BioSolutions (NYSE:EBS) were crashing 18.4% lower as of 11:13 a.m. EDT on Monday. The big drop came after the U.S. District Court for the District of New Jersey reached a decision after the market closed on Friday in a patent lawsuit regarding opioid overdose treatment NARCAN, a nasal spray. The court ruled in favor of Teva Pharmaceuticals (NYSE:TEVA) and against Emergent and its partner, Opiant Pharmaceuticals.
The decision by the U.S. District Court is a huge blow to Emergent. NARCAN generated $72.2 million in sales for the company in the first quarter of 2020, nearly 38% of its total revenue.
Technically, the court decision applies only to the NARCAN 4 mg nasal spray. Emergent also markets a 2 mg version of the product. However, Emergent and Opiant are also in litigation with Teva over the lower-dose version of the product.
Should the court's ruling stand, Emergent will face generic competition from Teva for its top-selling product. It also is involved in similar patent litigation with Perrigo over NARCAN 4 mg nasal spray.
Emergent BioSolutions stated that it intends to appeal the decision by the U.S. District Court. The company, though, plans to provide an update to its 2020 financial outlook as a result of the negative ruling when it announces its second-quarter results.
In the meantime, the main catalysts to look forward to with the biotech stock are related to its COVID-19 efforts. Emergent recently won a contract with the U.S. government worth around $628 million to manufacture novel coronavirus vaccines. It's also developing plasma-derived therapies targeting COVID-19.