Are the Teva/Momenta MS Patent Reactions Too Large?

Teva Pharmaceutical Industries Limited (NYSE: TEVA) are up 4.7% a $39.75 on more than 12 million shares, while Momenta Pharmaceuticals Inc. (NASDAQ: MNTA) are down over 22% at $13.19 on more than 2 million shares.  Mylan, Inc. (NASDAQ: MYL) is also lower as it is Momenta’s partner.

The suit has been around since about 2008 and Teva was not necessarily expecting that it would win an entire Copaxone patent ruling.  While the reaction looks severe, our understanding is that this effectively extends that Copaxone patent into 2015.  So we are generally looking at three more years of exclusivity.  The ruling is also subject to appeal.  It could very well come about that today’s moves up and down only come to a fraction of the actual extreme case scenarios.

Biogen Idec Inc. (NASDAQ: BIIB) is hardly impacted at all and it has become the de facto king of MS drugs.  Shares are up 0.1% at $141.91 but its $33.9 billion market capitalization rate is currently larger than that of Teva.  Maybe you can argue that the patent protection on one MS drug is good news for an MS drug rival under patent because it is the generic sector hurting the most.

What is so interesting here is that Teva is generally considered a generic maker by most investors.  Does a favorable patent ruling hurt the value of the rest of its business tied to generics?  Unlikely, but this company has been battered to the point that some investors wonder if the value has been taken down to where its brand-drug business has been given a zero-dollar value.

These moves are big ones in all of these shares.  The moves may even prove to be too big.

JON C. OGG