Gilead Sciences, Inc. (GILD) received a notification regarding a patent challenge for its flu drug Tamiflu (oseltamivir phosphate) 75 mg capsules. As per the notification, Indian pharma company Natco Pharma Limited filed an Abbreviated New Drug Application (ANDA) with the US Food and Drug Administration (FDA) seeking permission to manufacture and market generic versions of 75 mg Tamiflu capsules in the US. Gilead receives royalties from Roche (RHHBY) on sales of the drug.
The ANDA contains a “paragraph IV” patent certification, for Tamiflu. The paragraph IV certification implies that Natco believes the relevant patent (5,763,483) to be invalid and/or will not be infringed by the generic version of Tamiflu. The patent is listed on the FDA’s approved drug products list. For Natco to avoid liability, all patent claims in the suit must be deemed invalid, not infringed, unenforceable, or expired.
Management at Gilead is currently scrutinizing the notice. Gilead can file a complaint alleging patent infringement against Natco within 45 days from the date of receipt of the notice. The lawsuit would prevent the FDA from approving Natco’s application for Tamiflu for up to 30 months or until a district court decides in favor of the Indian company, whichever takes place first.
Our Recommendation
Currently, we have a Neutral recommendation on Gilead, which is supported by a Zacks #3 Rank (short-term Hold). We remain optimistic on the growth potential of Gilead’s HIV franchise drugs, Truvada and Atripla, and the company’s overall progress with its pipeline, both HIV and other. However, the potential delay for the Truvada/TMC 278 combo pill is a major setback for the company.
Moreover, Gilead’s HIV drugs are facing patent challenges from companies seeking to launch generic versions of the drugs. Further, Gilead’s revenues continue to be unfavorably impacted by pricing pressure in Europe and currency fluctuation.
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