J&J's blockbuster Zytiga falls to patent challenge, boosting threat of 2018 generics

Johnson & Johnson suffered a loss at the U.S. Patent Trial and Appeal Board on its blockbuster Zytiga. (Wikipedia)

After a relatively short but profitable run on the market, Johnson & Johnson's prostate cancer therapy Zytiga faces the prospect of generics this year, thanks to a patent-office ruling that stripped away its last remaining patent.

The U.S. Patent Trial and Appeal Board invalidated Zytiga's 2027 patent Wednesday, after an inter partes review challenge by would-be generics maker Argentum Pharmaceuticals. Zytiga copies could hit the market as soon as October.

J&J says it's "disappointed" in the ruling and will ask for a rehearing or appeal to protect its blockbuster therapy. The PTAB struck down the patent on grounds of obviousness after hearing arguments brought by Argentum. "We believe the '438 patent is valid and will continue to vigorously defend it," J&J said in a statement

Branded drug giants have protested loudly about the IPR process, introduced just a few years ago, but in a statement, Argentum Pharmaceuticals CEO Jeffrey Gardner said his company is "pleased" with the result. 

"The inter partes review process is an important tool by which generic and biosimilar companies can create prescription drug savings by ensuring that non-innovative patents do not block competition," he added.

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In a note Wednesday, Credit Suisse analyst Vamil Divan wrote that his team "did not expect the final patent remaining on Zytiga to hold up to challenge, and we have been anticipating a generic entry following the expiration of a 30-month stay in October 2018." An official patent challenge from a generics maker triggers that automatic delay under the Hatch-Waxman Act.

Other pharma watchers may not have been prepared for the news, though. As Divan wrote, Credit Suisse's projections for Zytiga sales in 2019 and 2020 are already lower than consensus, so many "analysts and investors may have been caught by surprise by today's news." 

Zytiga brought in $826 million in the U.S. through the first 9 months of 2017; J&J hasn't yet reported full-year 2017 results. In 2016 in the U.S., the drug generated $1.1 billion. The patent wasn't set to expire until 2027 and would have shielded years of blockbuster sales if it held up to the IPR attack and others in federal court.

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But more than 50% of Zytiga's sales come from outside of the U.S., where the drug has protection until 2022, Divan noted, so the drug is likely to remain a big earner for J&J in any case.

The PTAB's decision is a setback for J&J in its prostate cancer battle with Pfizer, which sells the blockbuster Xtandi. Currently, Pfizer and J&J's prostate cancer drugs are used in the same patient group, but both companies are working to widen their reach.

Pfizer picked up Xtandi in a $14 billion Medivation buyout and posted positive data in September in patients with premetastatic castration-resistant prostate cancer, for whom there are no FDA-approved treatments. J&J has an FDA application in for its experimental drug apalutamide to treat the same group. It's also awaiting word on its filing for a new Zytiga indication in newly diagnosed hormone naïve metastatic prostate cancer.

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Zytiga's exclusive protections were relatively short-lived; the drug only won its FDA approval in 2011. Some blockbuster drugs, on the other hand, win new patents during their run on the market that stretch their exclusivity out for many years. AbbVie's Humira, for instance, won its initial approval in 2002 and the company recently entered a settlement postponing Amgen's U.S. biosimilar until 2023.

The Zytiga decision could add to pharma's angst about the current U.S. patent challenge system for pharmaceuticals, in which drugmakers have to defend their products in both federal courts and at the U.S. Patent and Trademark Office. The issue came into the public spotlight last fall when Allergan signed a tribal licensing deal to protect Restasis at the PTAB and moved to deflect criticism by pointing to the "flawed" patent challenge system that it said amounts to a "double jeopardy."