King Pharma shares fall on Altace patent concerns

NEW YORK (Reuters) - King Pharmaceuticals Inc. (KG.N) shares fell more than 8 percent on Monday amid concerns it would lose a U.S. court ruling that would pave the way for a generic version of its Altace blood-pressure drug, analysts said.

The share decline follows a hearing last week before the U.S. Court of Appeals for the Federal Circuit involving King and India's Lupin Ltd. (LUPN.BO) King won a lower court ruling last year against Lupin that upheld King's patent.

The stock is "down on concerns that the federal circuit may invalidate the Altace patent, which would allow generics to come to the market approximately a year earlier than expected," Cowen and Co. analyst Ian Sanderson said.

King shares were off $1.84, or 8.7 percent, at $19.24 in afternoon trading on the New York Stock Exchange.

King's put volume was also heavier than usual as some investors placed bearish bets hoping to profit from share weakness or protected their share holdings from adverse share moves.

Near midday, 7,639 puts compared to 751 calls circulated in King, way above its regular volume of 663 total contracts, according to market research firm Track Data.

King is down on "unconfirmed concerns circulating regarding risk to the Altace patent dispute," said Paul Foster, options strategist at Web information site theflyonthewall.com.

Cowen's Sanderson said generics of Altace, King's biggest-selling drug, are expected to arrive in April 2009.

Bristol, Tennessee-based King is expected to transition patients to a new tablet version of Altace, but an earlier arrival of generic competition to the older version could challenge that strategy, Sanderson said.