Indivior surges on preliminary injunction over Dr Reddy's generic film

A US court has granted a preliminary injunction to prevent Dr Reddy's Laboratories from selling a generic version of Indivior's Suboxone Film for treating opioid addiction until a decision is made on patent litigation.

The US district court issued the preliminary injunction as it determined that Dr Reddy's had likely infringed on Indivior's intellectual property, as defined under patent number 9,931,305, analysts said. Under the injunction, Dr Reddy's is restricted from selling, marketing or importing its generic film.

The New Jersey district court late last Friday ordered both parties to submit a final proposed injunction order relating to one of Indivior's patents relating to Suboxone, its key product in recent years, and also ordered Indivior to post a bond to provide security to Dr Reddy's in case the court decides that its patent is invalid and/or has not been infringed. The amount of the bond will be determined by the court at a later date.

Last week Indivior issued a profit warning and removed its financial guidance for the year, partly due to being unable to accurately determine what quantity of generic sublingual film Dr Reddy's had sold before the district court granted a temporary restraining order.

Shaun Thaxter, Indivior's chief executive, said the company did not know when the patent litigation would be concluded, but indicated it would appeal if the injunction went against it.

"It is important to recognize that the court's decision does not prevent patients or payors from accessing existing generic sublingual buprenorphine/naloxone medications, as all currently available treatments are unaffected by today's ruling. The US market for medication-assisted treatment is already highly competitive with multiple therapies available, over half of which are generic medicines."

Indivior shares jumped 27% to 369.5p on Monday morning, but were still below the 377p from before the profit warning.

Analysts at Jefferies said they view the PI as "a major boost to sentiment" and said it "could set a cautionary tone" for other generic drugmakers such as Alvogen, Mylan and Teva that are looking to submit new drug applications for their version of the film.

"While the PI ruling could prevent [Dr Reddy's] from launching until the outcome of the '305 patent case (mid 2020), Alvogen could still launch near term. In our base case we assume Alvogen launches mid-2019 and DRRD and Mylan launch mid 2020, while Teva is enjoined from launching until 2024. That said, we recognise there is upside to this case as the recent PI makes a settlement with Alvogen more likely, while the court specifically determined that it is likely that DRRD infringes the ‘305 patent, which could mean DRRD is enjoined from launching until 2022."

RBC Capital Markets agreed that the injunction could "stop interference" as Invidior continues to launch its newer, "best in class" product Sublocade, which is a longer-lasting treatment.

"We see this news as pushing the generic challenge out by at least circa 4-6 months given initial appeal timelines but, perhaps optimistically, by 12-18 months (and again to 36 months). We would remind investors that our forecasts assume a generic entrant by 1H-2019, and hence in line with these timelines, but materially ahead of current consensus forecast assumptions which have turned more negative in recent weeks."

RBC said it saw fair value at a share price closer to 550p. "For Indivior shareholders, recent events have been challenging but we would argue the reward is coming home."