Ribapharm Loses Ruling on Drug
A federal judge Wednesday dealt a potentially severe blow to Costa Mesa-based Ribapharm Inc. and its majority owner, ICN Pharmaceuticals Inc., ruling that a new generic formulation of Ribapharm’s top-selling hepatitis C drug would not infringe patents owned by ICN.
The case involves a copycat version of the drug, ribavirin, planned by three companies: Teva Pharmaceutical Industries Ltd., the world’s largest generic manufacturer; Three Rivers Pharmaceuticals; and the Geneva-based pharmaceuticals unit of Novartis.
“With this court ruling, I expect the U.S. Food and Drug Administration to approve multiple ribavirin generics within the next month,” Banc of America Securities analyst Scott Kay said.
The news sent Ribapharm’s stock down 20%, making it the biggest percentage loser on the New York Stock Exchange. Ribapharm’s only product is ribavirin, and Costa Mesa-based ICN reaps royalties from sales of the drug, accounting for about 30% of its revenue.
The ruling by the U.S. District Court in Los Angeles also muddied the waters of a fight between ICN and Ribapharm over a tender offer by ICN to buy back the Ribapharm shares it does not already own at $5.60 each.
Before Wednesday, Ribapharm’s stock had traded consistently above $6, but shares fell $1.37 to $5.47. ICN’s stock also fell sharply during the session but recovered late in the day to close at $16.10, down 53 cents.
ICN said that it would reassess its earnings forecast in the wake of the judge’s ruling and that it would reconsider its offer to buy back the Ribapharm shares. Ribapharm’s board had rejected ICN’s offer, which is set to expire Tuesday, as too low.
Ribapharm executives said the company would appeal the judge’s decision. It posted sales of about $865 million for ribavirin in the United States last year and $387 million in Europe.
Ribavirin is marketed by Schering-Plough Corp. for use as a combination therapy with Schering’s interferon drug to treat the liver disease. The combination drug, called Rebetol, had sales of $721 million in the fiscal year ended in March.
That marketing agreement produced royalties of $270 million for ICN last year. Ribavirin sales have taken a hit since December, when Swiss drug maker Roche Holding launched a lower-cost medicine that competes with Rebetol.
In the first quarter, royalties from ribavirin fell 15% to $48.6 million, down from $57 million a year earlier. Analysts said royalties could drop precipitously as a result of the ruling.
Reuters was used in compiling this report.