Skip to main content

A few words to all


(SNY) - Get Sanofi Report

investors reveling in the

recent legal victory involving Plavix: Don't get too comfortable.

First, the Plavix patent battle isn't over. A preliminary injunction won by Sanofi last week is being appealed by


, the maker of a generic version of the popular anticoagulant. The formal patent-infringement trial against Apotex won't start until January.

Second, Sanofi has another patent fight looming for its best-selling drug, Lovenox. This court contest portends to be more complicated than the

duel over Plavix, its second-biggest drug. The U.S. trial for Lovenox was originally set for October, but it's been postponed until December.

At stake is a drug that had worldwide sales of $1.58 billion for the first six months of 2006, or 8.8% of the company's total revenue. More than 60% of Lovenox sales came from the U.S. The injectable Lovenox, available in the U.S. since 1993, is used primarily to prevent deep-vein thrombosis, the development of clots usually in the legs, which could lead to clots in the lungs.

Plavix accounted for $1.47 billion, or 8.1%, of Sanofi's revenue for the first half of 2006. Another $2.13 billion in first-half Plavix sales was recorded by

Bristol-Myers Squibb

(BMY) - Get Bristol-Myers Squibb Company Report

, which has the U.S. marketing rights. Plavix tablets help prevent the sticking together of blood platelets, reducing the risk of clots that can cause a heart attack or stroke.

Although the clash with Apotex forced Sanofi to cut its full-year earnings per-share growth prediction to 2% from 12%, the French drugmaker doesn't mention the Lovenox patent fight as a risk factor for this year.

TheStreet Recommends

Additionally, a December court date with

Teva Pharmaceutical Industries

(TEVA) - Get Teva Pharmaceutical Industries Ltd. Report

and privately held

Amphastar Pharmaceuticals

is only part of the litany of Lovenox litigation that's been going on for three years.

Last month, Sanofi sued the


unit of


(NVS) - Get Novartis AG Report

for patent infringement. Novartis is a partner with

Momenta Pharmaceuticals

(MNTA) - Get Momenta Pharmaceuticals, Inc. Report

, a company that has developed a generic version of Lovenox. The deal was signed in late 2003. Momenta asked the Food and Drug Administration for approval in August 2005, but the agency has yet to act.

"The legal status of Sandoz's

application appears unclear," David Beadle, of UBS Securities, wrote in an August research report. "According to Sanofi-Aventis, the FDA cannot approve Sandoz's

application until the

December patent litigation is resolved."

The pivotal case against Teva and Amphastar goes back to August 2003, when the two were sued by the former independent company Aventis. In June 2005, a federal district court judge granted summary judgment in favor of the generic-drug companies that challenged two Lovenox patents.

But in April 2006, a federal appeals court reversed the decision and sent the case back to the trial court. The appeals court agreed with some of the trial judge's findings but disagreed with the judge's opinion that Sanofi intended to mislead the U.S. Patent and Trademark Office.

The company's conduct appears to be the key issue in the upcoming trial.

No Lovenox Lost

Although analysts have focused intensely on Plavix, some identify Lovenox as part of their long-term concerns about the drug giant.

"Sanofi's patent risks do not end with Plavix," Graham Parry, of Merrill Lynch, said in a Sept. 6 research report. "The company has one of the highest off-patent exposures in the European Union pharma space."

Parry, who is neutral on the company, says that even if Sanofi wins the Lovenox case, the drug will lose patent protection in February 2012. Other important drugs losing patent protection include Ambien, whose U.S. patent expires next month; cancer drug Taxotere, which becomes subject to generic competition in 2010; blood-pressure drug Avapro, which goes off patent in 2012; and cancer drug Eloxatin, which loses patent protection in 2013.

Parry says the biggest "downside risk" would come from patent challenges that could result in earlier-than-expected generic competition for Lovenox, Eloxatin and Ambien CR, the successor to Ambien. Parry doesn't own shares; his firm has had a recent investment-banking relationship with Sanofi.

UBS analyst David Beadle is more confident about Lovenox. "We believe generics of Lovenox will find it difficult to prove bioequivalence and hence obtain FDA approval," says Beadle, referring to the need for generic drugs to prove they are therapeutically equivalent to brand-name drugs.

"Our model assumes no generic competition prior to patent expiry," says Beadle, who doesn't own shares and whose firm has had an investment-banking relationship with the drugmaker within the past three years. Without generic competition, Beadle predicts that Lovenox could produce worldwide sales of $3.8 billion in 2010.

Still, the last thing analysts want to see is another patent-related jolt to a company, whose near-term R&D pipeline isn't considered very strong.

"Beyond Acomplia, we see little in the way of positive catalysts," says Parry. "We remain concerned about the lack of late-stage pipeline progression in recent years."

Acomplia is a weight-loss drug

still under review by the FDA. Although Acomplia has been

approved by the European Union, the U.S. is the largest sales opportunity for the company. Acomplia officials have predicted that the FDA would approve the drug by year-end.

Sanofi also suffered a setback on Aug. 31 when the FDA rejected its application for Multaq, a drug for the erratic heartbeat called atrial fibrillation. The company expects to file a new application during the first half of 2008, pending the completion of an ongoing clinical trial.

On Sept. 7, Sanofi withdrew its Multaq application from the FDA's counterpart at the European Union. It plans to resubmit its application during the first half of 2008.