Sanofi-Aventis Trips in Court

Shares of Sanofi-Aventis (SNY) dropped Thursday after the company said it had suffered a legal setback in a U.S. patent fight involving its best-selling drug, the blood thinner Lovenox.

Sanofi-Aventis said it will appeal a June 15 decision by a federal District Court in California granting a summary judgment in favor of privately held Amphastar Pharmaceuticals of Rancho Cucamonga, Calif.

Sanofi-Aventis's stock fell $2.16, or 5%, to $41.11. It was down as low as $40.42 on volume of more than 14 million shares. That's more than 12 times the average daily trade.

If the decision stands, the court would lift a 30-month stay against Amphastar and Teva Pharmaceutical Industries (TEVA), which are both trying to sell generic copies of Lovenox. The stay has been in effect since the former Aventis filed patent infringement suits against both companies in August 2003. Aventis merged with Sanofi-Synthelabo last year.

Although the court's ruling is a setback for Sanofi-Aventis, the legal process and the FDA review will take a long time, says Tim Anderson of Prudential Equity Group. He issued a research note Thursday saying that if the generics companies prevail, the copycat versions of Lovenox could ultimately cut Sanofi-Aventis' earnings per share by as much as 10%.

Anderson has an overweight rating on the stock. He doesn't own shares, and his firm doesn't have an investment banking relationship with the company.

Last year, Lovenox accounted for about 7.5% of Sanofi-Aventis' total sales, or around $2.3 billion at the current euro-to-dollar conversion rate.

Lovenox is one of two big Sanofi-Aventis drugs facing U.S. patent challenges. The other is the blood-platelet anticoagulant Plavix that Sanofi-Aventis sells in collaboration with Bristol-Myers Squibb (BMY).

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