Can Takeda prolong Actos' life?

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With so many high-profile pipeline setbacks over the past couple of years, could the tide be turning back in Takeda’s favour with regard to one of its biggest and most valuable products?

Yesterday’s patent litigation settlement with Watson Pharmaceuticals will delay the launch of Watson’s generic version of key diabetes drug Actos until August 2012, a full 19 months after expiry of the drug’s main patent in January 2011, the point at which the market is currently expecting significant generic competition. If Takeda can similarly ward off other generic threats the gains could be significant, adding $1.9bn to profits from Actos (see tables below). Takeda’s shares gained 1% in trading today to reach a 12-month high of ¥4,075.

Hanging on

Despite the proximity of Actos’ patent expiry in the US, just ten months away, the drug is still Takeda’s third most valuable product, currently valued at $3.86bn, according to EvaluatePharma’sNPV Analyzer.

As it stands, generic versions of Actos are expected to hit the market by the end of January next year, most notably from Mylan, making it one of the biggest product patent expiries in 2011 (Calm before 2011 patent storm, March 4, 2010).

US sales of $3.19bn in 2009 are set to decline by almost 80% to $727m by 2012.

Actos Sales Model (Takeda) WW and USA sales ($m)
2008 2009 2010 2011 2012 2013 2014
USA sales 3,013 3,186 2,995 1,080 727 556 384
Ex. USA Sales 852 991 1,135 1,108 1,095 1,029 963
Global Sales 3,865 4,177 4,130 2,188 1,822 1,585 1,347

Takeda successfully fought off a patent challenge launched in 2003 by Mylan and Alphapharm, a generic division of Merck KGaA which has since been acquired by Mylan.

The original trial and subsequent appeals ruled in Takeda’s favour in upholding the ‘777 patent for Actos, preventing the FDA from approving and Mylan from launching its generic version until after patent expiry in January 2011.

However, the current settlement with Watson suggests that Takeda’s ten further patents surrounding Actos listed on the FDA Orange Book, mainly related to method of use and combinations which all expire in 2016, may hold merit.

As such, if Takeda is successful in fighting off other generics, including Mylan’s version, until August 2012, the cash profit from Actos could swell to $5.75bn over the next 20 years, as illustrated in the table below.

Actos: My NPV Analyzer
Default My NPV Change
Share Price ($) 44.78 47.17 +5.3%
Market Cap ($m) 35,361 37,249 +1,888
NPV (after-tax) ($m) 3,864 5,752 +49%
NPV Per Share ($) 4.9 7.3 2.4
% of Share Price 10.9 % 16.3 %
Share Price Date 10-Mar-10
WW Peak Sales (adj) ($m) 2,997
WW Peak Sales (unadj) ($m) 3,061 4,303
Patent Expiry 17-Jan-11 17-Aug-12

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