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Regeneron Pharmaceuticals (REGN) and Sanofi (SNY) were found to have infringed on patents held by Amgen (AMGN) involving a new type of cholesterol drug. Evercore ISI’s Mark Schoenebaum has the details:
We understand the jury had ruled in favor of Amgen (patents are valid). No info on damages/royalties yet, etc.
Recall, Amgen initiated litigation against Regeneron/Sanofi in Oct 2014 by asserting that Praluent infringed Amgen’s patents, which are broad. Thus, the key question going into this trial was whether or not Amgen’s patents would be deemed valid. Street expectations for a settlement had come down going into the trial, and it appeared that consensus on average expected a ~5% royalty, because Regeneron had previously settled with Genentech on a similar case for a 5% royalty on Eylea (that royalty is rolling off in May this year).
Impact to Regeneron…
Based on our latest model, a 5% royalty (~$106 M) on Regeneron US PCSK9 sales would represent a ~$0.28 (~1%) negative impact to 2020 EPS, $31.55 -> $31.27…
What happens next?
Amgen/Regeneron will likely appeal to the Federal Circuit Appeals Court, which could take ~12-18 months. Recall, no new arguments are able to presented in the Appeals Court (appeal is fact-based) and so the bar is relatively high.
There is a permanent injunction hearing scheduled for March 23-24 (in a couple weeks). Recall, Amgen did not file for a preliminary injunction in this case, just a permanent injunction.
Nobody looks like a winner, however. Shares of Regeneron Pharmaceuticals have dropped 1% to $363.62 at 1:15 p.m. today after trading up as much as 3% before the news, while Sanofi has dropped 1.7% to $40.45 , and Amgen has dropped 0.8% to $142.07 after spiking as much as 1.6% when the news was announced.
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