Teva's Generic Famir Victory Overshadowed by Novartis' Emergency Injunction

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Includes: NVS, TEVA
by: Aaron F. Barkoff

Novartis (NYSE:NVS) and Teva (NYSE:TEVA) have been in litigation over Teva's ANDA for generic Famvir (famciclovir), Novartis's antiviral treatment for herpes, since 2005. Teva was prepared to launch its generic famciclovir product on August 24, 2007 - the day the 30-month stay expired. To prevent such an at-risk launch, Novartis filed a motion for a preliminary injunction, claiming that Teva infringes U.S. Patent No. 5,246,937.

Last Wednesday, following a one-and-a-half hour oral argument, the district court denied Novartis's motion. On Thursday, the court released its opinion,(pdf) in which it concluded that Novartis was unlikely to succeed on the merits of its case, and that Novartis would not suffer irreparable harm from denial of the injunction. Specifically, the court ruled that Novartis failed to show that Teva's obviousness and inequitable conduct defenses lack substantial merit. The court further ruled that any economic harm to Novartis is not irreparable since Teva is able to pay whatever damages may arise, and that Novartis's research activities would not be disrupted by a temporary reduction in Famvir sales revenue.

On Thursday afternoon, Novartis filed an Emergency Motion for an Injunction Pending Appeal (pdf) with the Federal Circuit. Friday morning, Teva announced that it had "commenced shipment of Famciclovir Tablets" and that it is the 180-day exclusivity holder. Friday afternoon, the Federal Circuit ordered (pdf) that Teva "is temporarily enjoined from selling its generic famciclovir product, pending the court's receipt of Teva's response and the court's consideration of the papers submitted." Teva filed its opposition brief (pdf) this past Tuesday, and Novartis filed its reply brief (pdf) on Wednesday. The Federal Circuit is still considering the parties' submissions.

The primary issue on appeal is whether the claims of the '937 patent are invalid as obvious. The district court ruled that it would have been obvious to select penciclovir as a lead compound from which to design famciclovir because it was "one of only five known acyclic nucleosides to have strong activity and low toxicity." On this basis, the court distinguished the case from Takeda Chemical. Quoting KSR, the district court stated that "selecting penciclovir was a matter of 'ordinary skill and common sense.'" Further, the court ruled that it would have been obvious to modify penciclovir into an effective orally-absorbed prodrug (famciclovir). Both of these questions are hotly contested on appeal. The inequitable conduct and irreparable harm issues are secondary.

Famvir is a relatively minor product for Novartis, with about $200 million in annual U.S. sales. Nevertheless, the case is important to the parties, especially since Teva's 180-day exclusivity is running while it is enjoined from marketing its product. A decision from the Federal Circuit on Novartis's motion is expected next week.

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