Bristol-Myers rakes it in as Taxol dispute drags on:
By Ransdell Pierson
NEW YORK, Sept 13 (Reuters) - Although the patent battle over cancer drug Taxol is baffling and could takes months to resolve, Bristol-Myers Squibb Co. stands to gain almost $1 million each additional day the dispute remains tangled in the courts, Wall Street analysts said on Wednesday.
The treatment for ovarian and breast cancer is the world's best-selling oncology medicine, garnering Bristol-Myers annual global sales of $1.5 billion -- including about $1 billion in the United States.
The pot of gold is endangered, however, because the company's U.S. marketing exclusivity on Taxol has expired and Miami drugmaker IVAX Corp. (AMEX: IVX) aims to soon sell its own copycat version of paclitaxel, the drug's active ingredient.
IVAX has already received tentative approval from the U.S. Food and Drug Administration to go ahead, but not until it has resolved a patent battle with Bristol-Myers and privately held American BioScience Inc of Santa Monica, Calif.
"I don't expect this to drag through the courts for an eternity. I'd be surprised if we're still trying to figure this out by the end of the year," said James Kelly, a pharmaceuticals analyst for Credit Suisse First Boston.
On the other hand, Kelly said there was a chance the patent dispute could take seasons or years to unwind, and Bristol-Myers would continue to maintain its monopoly on the drug all the while.
If Bristol-Myers (NYSE: BMY) manages to keep its lock on Taxol, it will see U.S. sales of the cancer drug increase 10 percent to $1.1 billion in 2001, Kelly predicted. By contrast, the sales will likely drop 20 percent to $800 million if IVAX is allowed to sell a cheaper rival product, the analyst added.
Using similar calculations, PaineWebber analyst Jeff Chaffkin said an unfavorable outcome could cost Bristol-Myers over $300 million in potential Taxol sales, or almost $1 million a day in 2001. Other analysts have suggested lost U.S. revenues could approach $400 million.
"The stakes are real because Bristol-Myers needs those revenues to help accelerate growth of its earnings," said Chaffkin. With a monopoly on Taxol, he said the company's 2001 earnings per share would grow 11 percent to $2.60 -- versus 10 percent growth to $2.55 if IVAX goes to market.
By contrast, a copycat paclitaxel would be a major boon for IVAX. "The generic drug would have $100 million in revenues its first full year on the market, which is impressive when you consider the company now has annual revenues of about $850 million," said Gruntal & Co analyst Jeffrey Kraws.
Most drugs lose up to 80 percent of sales during the first year they face generic competition. Taxol would lose just 20 to 30 percent of its U.S. sales, however, because the drug is hard to make and IVAX is the only generic rival on the horizon, said Barbara Ryan, analyst for Deutsche Banc Alex. Brown.
Moreover, Ryan said, Bristol-Myers is the largest distributor of cancer drugs in the United States and would attempt to bundle Taxol with its other line of oncology products in sales calls to doctors and hospitals.
"The patent dispute is very confusing and nobody knows how it will turn out. But at the end of the day it continues to delay IVAX from launching a generic Taxol. So on that basis, it's positive for Bristol-Myers," Ryan added.
A Newark federal judge in March invalidated key provisions of patents protecting Taxol, seemingly ending Bristol-Myers' two-year battle with IVAX and paving the way for IVAX to launch a generic rival.
But on August 11, tiny American BioScience (ABI) complicated the picture by suing Bristol-Myers in U.S. District Court in Los Angeles, alleging it was violating one of its own patents related to dosing of Taxol. It sued Bristol-Myers even though a month earlier it had granted the No. 3 U.S. drugmaker an option to take out a non-exclusive license on ABI's patent.
Los Angeles federal court judge William Bryne then ordered Bristol-Myers to list the ABI patent in the FDA's so-called Orange Book, which lists patents related to already marketed prescription drugs.
Once a patent lands there, the FDA is forbidden to approve generic forms of any related drug for up to 30 months in order to let patent disputes wind their way through the courts.
In effect, the ruling was a victory for both ABI and Bristol-Myers, because the Orange Book listing blocks the FDA from giving final marketing approval to the IVAX generic.
Bryne switched gears on September 6, saying he never had jurisdiction in the case and ordered Bristol-Myers to de-list the ABI patent from the Orange Book.
The next day Bryne stayed his decision until the close of business today, in order to give the parties time to appeal to the U.S. 9th Circuit Court of Appeals in San Francisco.
ABI, which indeed filed an appeal urging that its patent remain in the Orange Book, could not be reached for comment late Wednesday. An official for the federal appeals court said no ruling in the case had been rendered and that a three-judge panel might take up the case later this week.
Meanwhile, to confuse matters further, Bristol-Myers has kept the ABI patent on file in the Orange Book and asked the U.S. Southern District Court of New York to advise it whether the listing should remain. |
