(Recasts; Adds analyst comment, background, shares, byline)
By Lewis Krauskopf
NEW YORK, Jan 21 (Reuters) - A U.S. court has invalidated two patents related to King Pharmaceuticals Inc’s KG.N Skelaxin muscle relaxant, King said on Wednesday, sending its shares down about 8 percent as investors worried about generic competition for the medicine.
Analysts have been bracing for eventual generic competition to Skelaxin, which was King’s biggest-selling medicine in the third quarter, although the timing has been uncertain.
Natixis Bleichroeder analyst Corey Davis said he expects generic competition to Skelaxin around the end of 2009, a year sooner than he previously expected.
“This would have a severe impact on (earnings) in 2010, but since the market has anticipated Skelaxin would go generic at some point, it is not a complete disaster for King,” Davis said in a research note.
King said it would appeal the order, issued by the U.S. District Court for the Eastern District of New York in response to a motion by generic drugmaker Eon Labs. Eon is owned by Sandoz, the generic drug unit of Novartis AG NOVN.VX.
The order is unrelated to King’s pending litigation against Sandoz in the U.S. District Court for the District of New Jersey over another Skelaxin patent, King said.
King also said that Sandoz has yet to receive U.S. approval for an application to market a generic version of Skelaxin, also known as metaxalone.
Davis said U.S. regulators have cited issues with Sandoz’s North Carolina manufacturing plant that would make generic Skelaxin, and Sandoz cannot gain approvals for products made at the site until it resolves the issues.
A Sandoz spokesman was not immediately available for comment.
Bristol, Tennessee-based King reported $110 million in Skelaxin sales in the third quarter, out of $388 million in total revenue.
King, which has recently endured generic competition to another big seller, the heart drug Altace, has been focusing on newer medicines, particularly for treating pain.
However, last month the U.S. Food and Drug Administration declined to approve King’s experimental pain drug Remoxy, asking for more nonclinical data, while it extended the review of another King experimental pain treatment, Embeda.
King shares fell 72 cents, or 8 percent, to $8.30 in morning trading on the New York Stock Exchange. (Editing by Derek Caney and Maureen Bavdek)