* Merck to appeal decision on leading brain-cancer drug
* Teva generic awaiting U.S. approval
* Merck and Teva shares fractionally lower
(Brings Merck response and detail of ruling higher; updates
By Ransdell Pierson
NEW YORK, Jan 26 A federal court ruled on
Tuesday that Merck & Co's (MRK.N) patent on Temodar, the
world's top-selling brain cancer drug, is unenforceable,
possibly clearing the way for Teva Pharmaceutical Industries
Ltd (TEVA.TA) to sell a generic form of the medicine.
Temodar, which Merck acquired in its November purchase of
Schering-Plough, has annual global sales of about $1 billion.
It has annual U.S. sales of about $380 million, which would
become prey to Teva's product.
Merck said it would appeal the decision and seek a stay to
prevent Teva from launching its copycat product before the
appeal runs its course.
"We are disappointed with the ruling and continue to
believe the patent is valid and enforceable, and we will
continue to defend our intellectual property," Merck spokesman
Ron Rogers said.
District Judge Sue Robinson, of federal court in Delaware,
ruled that the Merck patent was not enforceable, in part due to
Inequitable conduct refers to misstatements of fact by a
party seeking a patent, or failure to candidly disclose
relevant information to patent officials.
Teva's rival product has tentative marketing approval, but
is awaiting final approval from the U.S. Food and Drug
Administration. Once regulators clear it, the product is
eligible for six months of marketing exclusivity before rival
generics can go on the market, Teva said.
"Teva's generic already has tentative approval, so it's
certainly possible we will see it approved and launched within
the next 48 hours," said Leerink Swann analyst Seamus
"Once you have a district court decision, and you already
have tentative approval, that releases the FDA" to take action,
the analyst said.
Teva's less-costly medicine would likely batter sales of
the Merck brand and depress Merck's earnings by 4 cents to 5
cents a share this year, and for several years to come,
Sanford Bernstein analyst Aaron Gal said he expects Teva to
launch its product in the second quarter and for it to have no
competition from another generic until the third quarter.
Gal raised his 2010 Teva profit forecast by 6 cents a
share, to $4.83, and lifted his 2011 forecast by 4 cents a
share, to $4.89.
Merck contends the Temodar patent is valid through February
It is the second of Merck's products from last year's
purchase of Schering-Plough to recently suffer a setback.
Merck said last Wednesday that its experimental HIV
treatment vicriviroc proved ineffective in two late-stage
studies involving patients who had previously been treated for
the virus that causes AIDS.
Merck is continuing mid-stage studies of the drug among
patients not previously treated for HIV.
Merck shares closed down 18 cents, or 0.5 percent, to
$38.58 on the New York Stock Exchange. Teva TEVA.O shares on
Nasdaq fell 9 cents to $56.99.
The case is Cancer Research Technology vs. Barr
Laboratories Inc, U.S. District Court for the District of
Delaware, No. 07-457.
(Reporting by Ransdell Pierson and Bill Berkrot. Editing by
Robert MacMillan, John Wallace and Tim Dobbyn)