What happened

Biogen (NASDAQ:BIIB) shares slid 12.9% in June, according to data provided by S&P Global Market Intelligence, as the company lost a patent ruling on its blockbuster multiple sclerosis (MS) drug.

In a challenge involving rival Mylan, a federal court in West Virginia invalidated Biogen's Tecfidera patent. The decision clears the way for rival Mylan to bring a generic competitor to market. Biogen plans to appeal, Fierce Pharma reported, citing a statement from the company.

A researcher works in a lab with beakers filled with orange liquid.

Image source: Getty Images.

So what

Biogen's Tecfidera patent would have expired in 2028. That would have offered the company until that time to ramp up sales of its newer MS drug, Vumerity, to compensate for any Tecfidera sales declines. Instead, if Mylan's product comes to market, Biogen faces a more immediate threat to Tecfidera's $4.4 billion in annual revenue.

Mylan's product isn't yet approved, but that may happen soon. Mylan said the U.S. Food and Drug Administration's action date for its drug candidate is Nov. 16 -- but the company is talking with the FDA about possibly advancing that date.

As for Vumerity, launched late last year, sales haven't yet picked up, even though the drug offers the same efficacy as Tecfidera but with fewer side effects. Vumerity brought in $2 million in sales for the first quarter, its first full quarter on the market.

Now what

Pending an appeal, if Mylan's drug is approved, the company may decide to launch it "at risk." An "at risk" launch means selling a generic while patent litigation is ongoing. Meanwhile, according to a Generics Bulletin report, Biogen has obtained a temporary injunction, which could prevent Mylan from making that move.

Whether Mylan is able to launch its drug prior to an appeal decision or not, the West Virginia court decision likely will weigh on Biogen's stock. What may compensate for this and help shares of the biotech company in the coming months is any news on the investigational Alzheimer's disease drug, aducanumab. Biogen plans on completing its submission in the third quarter for FDA review.