We went to visit UCB once, a cold and wet wintery day where we got modestly lost in Belgium.
The investor relations people were straightforward. We were new to the story and our notes state clearly that generic challenges to the Vimpat patent were the main bear story for the stock. Our notes also talk about Keppra - another epilepsy drug. When it went off patent revenues dropped substantially. Keppra was an famous "patent cliff" drug.
The risk to Vimpat has been reflected in the press too. Fierce Pharma - an industry rag - reports that August 15 this year was the best day for UCB in years as a Delaware District Court had rejected challenges to the Vimpat patent. Notwithstanding this, Fierce Pharma noted that the patent still faced challenges. To quote:
UCB isn’t totally out of the woods, though. In late May, New York-based generics maker Argentum Pharmaceuticals won an inter partes review of Vimpat’s patent protection by the U.S. Patent & Trademark Office (PTO)’s Patent Trial & Appeal Board (PTAB). And that decision may not be handed down until next May.
Still, court’s decision is a “long-awaited sentiment boost” for UCB, whose shares had fallen by about 17% so far this year, Citigroup analysts wrote in a Monday note seen by Bloomberg. Despite the lingering risk of patent invalidation, they wrote, “we expect market confidence to improve.”
As noted Argentum Pharmaceuticals won an inter-parties review of Vimpat's patent. Argentum's press release however noted an even more aggressive request. To quote:
Argentum also filed an ex parte reexamination request against this same patent that raises additional grounds of unpatentability than those in the IPR. A decision by the PTO on Argentum's reexamination request is due no later than July 29, 2016.This is mentioned as afterthought in the press release because it is a really aggressive claim. Argentum asked the Patent Office itself to review the patent it previously granted and presumably throw out the original patent.
Given the afterthought nature of that request I suspect even Argentum will be surprised that the ex-parte review rejected all thirteen claims of the Vimpat patent.
In other words the Patent Office has thrown out the patent.
This is all in a letter dated 5 December 2016 (that is just a few days ago). You can find that letter here. And according to that letter UCB has only two months to dispute the total rejection of the patent by the patent office.
This rejection will of course be followed by Argentum and Mylan (and probably other companies) commencing distribution of a generic for Vimpat. Mylan were behind the above-mentioned court challenge.
It is - given the significance of this to the business - perhaps a little unusual that UCB has made no press release.
Is this the beginning of a new, more aggressive patent office?
The political pressure in the US to do something to reduce drug prices is large. In the past election this was one area of near universal agreement.
I am wondering whether we are going to see this sort of action by the Patent Office more widely.
If the trend is more widespread it could be bad news for pharma investors generally.