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Valeant: Uceris Patent Loss Could Further Impair Salix

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Shock Exchange


  • Teva prevailed in challenging patents for VRX's Uceris tablets.
  • MYL previously prevailed in challenging patents for VRX's Apriso.
  • I estimate the $16B intangibles related to Salix is impaired.
  • Apriso and Uceris represent about 19% of Salix's revenue. The loss of exclusivity likely hurt Salix's value even further.
  • Potential Salix impairment charges could challenge VRX's $4B equity base. VRX remains a sell.

VRX CFO Paul Herendeen. Source: wsj.com

A Delaware court ruled in favor of Teva (TEVA) in its challenge of patents covering Valeant's (VRX) Uceris (budesonide ER) tablets:

Teva Pharmaceutical Industries Ltd. (OTCPK:TEVJF), (NYSE and TASE: TEVA) today announced that the United States District Court for the District of Delaware has ruled in the Company’s favor in patent litigation involving Teva’s abbreviated new drug application ("ANDA") directed to a generic version of Valeant’s Uceris® (budesonide ER) tablets. At trial in May, the Court found that Plaintiffs did not meet the threshold to establish infringement, and the Court has now issued its written decision confirming that Teva’s ANDA product does not infringe the asserted patent.

“We are pleased to have another legal win on one of our first-to-file PIV patent challenges brought in through the Actavis Generics acquisition.” said Dipankar Bhattacharjee, President and CEO, Global Generic Medicines, Teva. “This presents another first generic opportunity for Teva and we look forward to offering this product to our customers when otherwise able to.”

Teva believes it is the first applicant to file an ANDA for generic Uceris and thus, could be rewarded a 180-day period of generic market exclusivity.

The Situation

An ANDA for generic Uceris could be a step in the right direction for Teva. It is currently reeling from a loss of exclusivity for its blockbuster multiple sclerosis drug Copaxone. An ANDA for Valeant could be devastating. Valeant built its operations via acquisitions, and justified them by raising prices of the target companies and cutting research and development ("R&D"). A loss of pricing power after shuttering specialty pharma Philidor and a loss of exclusivity in certain products has hurt Valeant's revenue and cash flow.

To pare its $28 billion debt load the company has engaged in asset sales. Their financial performance of the

This article was written by

Shock Exchange profile picture
The Shock Exchange has a B.A. in economics and MBA from a top 10 business school. He has over 10 years of M&A / corporate finance experience. Currently head the New York Shock Exchange, financial literacy program based in Brooklyn, NY.His book, "Shock Exchange: How Inner-City Kids From Brooklyn Predicted the Great Recession and the Pain Ahead", predicted pain ahead for the U.S. economy and financial markets.In 2014 the law firm of Kirby, McInerney, LLP brought a class action lawsuit against Molycorp, Inc. for "materially misleading statements" in its financial statements. Kirby, McInerney used investigative journalism from the Shock Exchange to buttress its case. That's the discipline the Shock Exchange brings to every situation he covers for SA.

Analyst’s Disclosure: I am/we are short TEVA, VRX.

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