Mylan scores review of Allergan's Restasis IP, but analysts aren't worried about the med's fate

Mylan has scored a victory in its quest to invalidate Allergan’s patents on blockbuster med Restasis. But the way one analyst put it, it’s “too early for tears” on the part of the Irish pharma.

Thursday, the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) agreed to embark on an inter partes review of all six patents covering Allergan’s star eye med, a decision the Dublin drugmaker said it was “disappointed in.”

“Allergan ... will continue to vigorously defend the patents in the IPR proceeding and pursue all legal options available to protect its products and intellectual property rights for this product,” the company said in a statement.

Leerink Partners analyst Jason Gerberry agreed that it’s no time to panic. The way he sees it, the patents “are likely to withstand” the PTAB’s review. One reason? In 2014, Allergan—pre-Actavis merger—managed to extend its patents through 2024 with “timely issuance of very narrow patents covering the exact concentrations of active and inactive ingredients used in the commercial embodiment.” And that tiny claim scope should help Allergan fend off the IPR challenge, he said.

Besides, in order for generics to actually begin taking down Allergan’s No. 2 seller—which generates about 10% of company sales—the FDA will have to approve copies, and on-time go-aheads from the agency may not be the “slam dunk” investors predict, Evercore ISI analyst Umer Raffat wrote in his own research note.

“We are picking up on data points that suggest that FDA's review of Restasis generics may be much more complex than what Street is anticipating. In theory, this could result in delayed approval timelines for generics,” he said. U.S. regulators in February updated their guidance, adding additional testing requirements, and made tweaks last October that could trip filers up as well, he noted.

Meanwhile, Bernstein’s Ronny Gal pegged the chances of patent invalidation success for Mylan at “somewhat higher than 50%”—but even if generics do hit the scene, “this will likely not be a classic commodity market,” he predicted.

“We expect to see some residual sales in the brand ... and somewhat limited generic competition,” he wrote, predicting 2020 sales of $600 million.

Of course, it’ll still be awhile before any PTAB decision comes through. The review process is slated to take one year, with a decision due date set for Dec. 9, 2017. A bench trial in an ongoing court case between Allergan and its generic filers is also scheduled for Aug. 29 of next year.

In the meantime, Allergan is busy battling new dry eye competitor Xiidra from Shire, a competition that "still matters," RBC Capital Markets analyst Randall Stanicky wrote to clients. But analysts have said Xiidra's entry could provide a boost for both meds as the market widens overall. 

“As Shire's Xiidra continues to ramp up, we expect the dry eye market to expand to ~$2B and become a stable oligopoly between the two products,” Bernstein's Gal wrote.