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Sanofi Takes Patent Hit

Robert Steyer

Sanofi-Aventis(SNY) said Friday that it lost a U.S. patent challenge to its best-selling drug, the anticoagulant Lovenox.

If the ruling by a federal District Court in California stands, the French drugmaker could see 60% of its Lovenox sales at risk to generic competition five years before the company says the patent would expire. Importantly however, the Food and Drug Administration hasn't approved any generic versions yet.

For the nine months ended Sept. 30, Lovenox recorded $2.37 billion in worldwide sales, accounting for 8.6% of Sanofi's corporate revenue. The drug has been available in Europe since 1987 and in the U.S. since 1993.

Sanofi said in a press release that it was "currently evaluating its options for further legal recourse and will continue to vigorously defend its intellectual property rights."

Israel's Teva Pharmaceutical Industries(TEVA), the world's largest generic-drug maker and the private California company Amphastar Pharmaceuticals brought the case against Sanofi.

Lovenox is different than Sanofi's other big anticoagulant Plavix, which also is embroiled in a U.S. patent lawsuit. Plavix is its second-biggest drug, producing sales of $2.19 billion for the nine months ended Sept. 30.

Lovenox is an injectable drug used in protecting patients against deep vein thrombosis -- blood clots that usually develop in the legs. If the clots break free, they can wind up in the lungs causing dangerous and potentially fatal consequences.

Plavix is a pill that prevents blood platelets from sticking together, reducing the risk of a heart attack or stroke. Platelets are essential for stopping excessive bleeding after an injury, but they also can lead to clots in arteries if they pile up next to accumulations of plaque caused by cholesterol.

A legal defeat for Lovenox would be worse than a courtroom loss for Plavix because Sanofi markets Lovenox by itself in the U.S. Bristol-Myers Squibb(BMY) sells Plavix in the U.S.

Sanofi, Teva and Amphastar have been fighting in court since August 2003. In June 2005, a federal judge granted the challengers summary judgment in a dispute over two Lovenox patents. In April 2006, a federal appeals court reversed the decision and sent the case back to the trial court. The major issue was whether Sanofi tried to mislead to the U.S. Patent and Trademark Office. The District Court retried the case in December.

Some analysts say Sanofi may avoid an immediate generic attack because Lovenox's complex formula makes it difficult for other companies to copy.

The legal defeat "is not wholly unexpected" even though Sanofi could appeal," said David Beadle of UBS Securities in a note to investors.

Because generic-drug makers must prove their products are bioequivalent to brand-name drugs, Beadle says it is "unlikely" that Teva and Amphastar can secure FDA approval. Bioequivalent means a generic must have the same strength and reach the desired target in the same way as a brand-name drug.

"The FDA's correspondence with Amphastar indicates a lack of conviction on the part of the agency that its product is equivalent to Lovenox," said Michael King, of Rodman & Renshaw, in a research report. "Publicly available documents argue that [Teva's] product also faces substantial hurdles in its effort to demonstrate equivalency."

King and Beadle say there's a better chance that the FDA could approve a generic from Momenta Pharmaceuticals(MNTA), which is working with the Sandoz unit of Novartis(NVS). Sandoz is the No. 2 generic-drug maker.

Beadle says the FDA might approve a generic by midyear. Beadle's firm has had a recent investment banking relationship with Sanofi-Aventis.