A Delaware court ruled Thursday that Roxane Laboratories ANDA product infringes against several Vanda Pharmaceuticals (VNDA) patents for schizophrenia drug Fanapt.
In March, Roxane filed a lawsuit challenging seven Vanda patents on the drug from 2014 and 2015.
Roxane was looking to gain government approval to market its own version, Reuters reported.
However, the ruling published today from a Delaware District Court revealed that Roxane's ANDA drug infringed on three separate patents held by Vanda.
Piper Jaffray analyst Joshua Schimmer and team described the news that Vanda had won a major patent decision. They explain:
This morning, Vanda won a district court decision for an important Fanapt dosing patent which would seem to provide exclusivity for another 10 years. We had assumed introduction of generics next year in order to be conservative and because the patent appears quite weak to us, but a District Court judge disagreed. It is unclear if the case will go to the Federal Circuit under appeal because it is a rather small drug with multiple generic challengers. So we are adding Fanapt back to our model and assuming increased spending along with it. PT to $19 from $16…
But it’s not all pure upside: While we had assumed Fanapt genericization next year and now assume it will stay exclusive until later in the next decade, we had also assumed that Vanda would significantly curtail spending on R&D and SG&A in order to monetize Hetlioz. With greater revenue comes greater flexibility for the company to invest in its pipeline and Fanapt infrastructure. As such, we are increasing spending assumptions as we no longer expect the company to move into ‘milk Heltioz’ mode. As such, our price target increases from $16 to new $19, based on an unchanged methodology of a DCF through 2022, with an 11% discount rate and 1% terminal growth. As we get greater comfort in capital deployment and lack of challenge to the Fanapt ruling (or carve-out), we may be able to lower our discount rate.
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