Ireland-based Shire (SHPGY) recently received notices from Amneal Pharmaceuticals and Watson Pharmaceuticals Inc. (WPI) regarding patent challenges to its drug Vyvanse, which is indicated for treating patients suffering from attention deficit hyperactive disorder (ADHD).
ADHD refers to a neurobiological disorder that is often hereditary in nature. The disease gives way to lack of attention and often results in impulsiveness and hyperactivity.
By issuing the notices (paragraph IV certification), Amneal and Watson Pharma informed Shire that they have filed abbreviated new drug applications (ANDAs) with the US Food and Drug Administration (FDA) to market generic versions of Vyvanse at all doses.
Shire is currently scrutinizing the notices and we expect the company to file patent infringement lawsuits within 45 days. The filing of patent infringement lawsuits within the stipulated time frame will trigger a 30-month stay by the FDA. We note that Sandoz (the generic arm of Novartis(NVS)) is also looking to market its generic version of Vyvanse. Shire received a similar notice from Sandoz on May 18, 2011. The marketing exclusivity for Vyvanse expires in February 2012, under the Hatch-Waxman Act.
We note that Shire is also entangled in a legal battle with Watson Pharma regarding another drug, Adderall XR, in its ADHD franchise. (Please refer to Shire, Watson in Legal Battle for our detailed coverage of the event ).
The market for ADHD is lucrative. Apart from Shire, the market includes players such as Eli Lilly & Company (LLY) and Johnson & Johnson (JNJ).
Our Recommendation
We currently have a long-term Neutral recommendation on Shire. The company carries a Zacks #3 Rank (Hold rating) in the short term.
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