Bausch Health Stock Halted After Patent Ruling. The Decision Could Be the ‘Worst Possible Outcome,’ Analyst Says.
Bausch Health stock was on pace for its lowest close since November 1995.
Timothy Fadek/Bloomberg
A federal court ruling has dealt a blow to Bausch Health by appearing to clear the way for generic competition for the company’s drug Xifaxan.
Bausch Health stock (ticker: BHC) plummeted more than 50% Thursday morning on the news, and trading of the shares was halted.
Xifaxan treats irritable bowel syndrome with diarrhea and liver disease. In 2020, Bausch Health Ireland and Salix Pharmaceuticals sued Norwich Pharmaceuticals in 2020 for patent infringement, regarding Norwich’s plans to bring a generic version of Xifaxan to market before its patents had expired, according to a Bloomberg Law report.
On Thursday, Judge Richard Andrews of the U.S. District Court for the District of Delaware ruled that some patent claims involving Xifaxan were invalid, but upheld others related to neurological symptoms of liver disease, according to the report. With certain patents deemed invalid, competitors like Norwich should be able to proceed with their own generic of Xifaxan if any appeal from Bausch Health is unsuccessful. Bausch Health did not immediately respond to a request for comment.
“If a negative ruling were maintained, a generic Xifaxin could enter the market as soon as 2024,” Douglas Miehm, an analyst for RBC Capital Markets, wrote Thursday.
Alvogen, Norwich’s parent company, said in an emailed statement to Barron’s that it is “very pleased with the district court’s decision which clears a significant hurdle in the path to bringing an affordable alternative to patients taking Xifaxan for IBS-D.”
Miehm, who rates the stock at Outperform with a $12 price target, added that Bausch Health will likely appeal to the U.S. Court of Appeals for the Federal Circuit, which he said could take up to 18 months before issuing a decision on the appeal.
The analyst called the ruling “potentially the worst possible outcome for BHC.” The decision could result in Bausch Health hitting his downside scenario of $4 per share, he added.
Before trading was halted around 10:30 a.m. Eastern time Thursday, Bausch Health shares tanked 50.3% to $4.32, which puts the stock on pace for its lowest close since November 1995, when it closed at $4.15, according to Dow Jones Market Data. The stock has fallen 84% in 2022.
Shares of Bausch + Lomb (BLCO), the eye-health unit of Bausch Health that went public in May, fell 6% Thursday to $15.11, while the S&P 500 gained 1.2%.
Write to Angela Palumbo at [email protected]
