A United States federal judge said Teva Pharmaceutical Industries Ltd did not infringe five patents related to the painkiller OxyContin, helping push Teva's shares up 6.7 percent to $44.21 on the New York Stock Exchange on Tuesday.
Earlier in the day, acting Teva CEO Eyal Deshe said at the JPMorgan healthcare conference in San Francisco that the company would cut at least $2 billion in annual expenses. The majority of the cuts will be in the generic division. Previously, the company had estimated spending cuts would be between $1.5 billion and $2 billion. Deshe said the spending cuts were expect to help Teva increase its gross profit margin by 10 to 15 percentage points in the next five years.
Teva executive at the conference also said they were confident a new version of its multiple sclerosis drug Copaxone that requires less frequent dosing will soon win regulatory approval for use in the United States. While Teva is better known for making generic drugs, its branded Copaxone drug accounts for about 20 percent of sales and 50 percent of profit.
Analysts believe it is important for Teva to roll out its newer version, which patients would inject three times a week rather than daily, before cheaper generic versions reach the market as soon as this year. Prof. Michael Hayden, chief scientific officer and president of global R&D at Teva, said that he expected 45% of Copaxone patients will move to the new drug by May of this year.
Deshe said at the conference that Teva considered Brazil and China as key markets for expanding its activities. He predicted that the number of global generic pharma companies would drop from four to two or three due to the economic logic of the industry.
In what will be interpreted as a concession to analysts and American institutional investors' concerns, incoming CEO Erez Vigodman will retain his seat on Teva's board. Until now, Teva's CEOs never held a seat on the company's board, something that worried analysts following the departure of former CEO Jeremy Levin after a dispute with the board over company strategy.
In his court ruling Tuesday, U.S. District Judge Sidney Stein rejected arguments by OxyContin manufacturer Purdue Pharma Inc that Teva infringed its patents by seeking U.S. Food and Drug Administration approval to sell generic equivalents of the drug.
Purdue said it will appeal.
Three of the patents related to an improved formulation of oxycodone, the active ingredient in OxyContin.
The other two patents were designed to prevent tampering that could allow would-be abusers to transform the tablets into an injectable liquid that could give them an opioid "high."
Stein said Teva proved that four of Purdue's patents were "obvious" or lacked "novelty," meaning that they didn't significantly advance what was already known, and that the fifth patent was not infringed in the first place.
Teva spokeswoman Denise Bradley declined to comment.