Teva's launch of a generic version of Wyeth's proton pump inhibitor Protonix (pantoprazole) means that Wyeth must quickly decide how much faith to place in its patent as it negotiates a potential settlement.

Wyeth announced on Dec. 24 that it will pursue a patent infringement claim against the generic firm following a same-day announcement from Teva that it had launched 20 mg and 40 mg delayed release tablets of pantoprazole.

Though Teva is not releasing an inventory count, its launch could have placed three-and-a-half months worth of production in the channel. The firms must now weigh the merits of a potential settlement against Wyeth's confidence in the patent's ability to recover lost sales in court, and Teva's assessment of the profit potential of its 180-day market exclusivity.

The Launch Is On Hold, But The Clock Is Ticking

In the meantime, Teva has agreed to a 30-day standstill-agreement during which the generic firm will not ship any additional generic pantoprazole. The 30-day agreement - which will end Jan. 22 and count against the 180-day exclusivity - will allow Wyeth to assess how much of the generic product has been shipped, and the terms it would accept for a settlement agreement.

The standstill would end should Wyeth launch its own generic pantoprazole, which Wyeth CEO Bernard Poussot said during the Dec. 24 conference call is an option the brand firm is considering.

FDA approved Teva's ANDA Aug. 2, following the expiration of the 30-month stay triggered by patent infringement suits Wyeth and its partner, German drug maker Altana (now Nycomed), filed against Teva and Sun Pharmaceuticals in 2004 and 2005 (the two cases were consolidated in 2007).

Sun's pantoprazole ANDA was approved in September, and Wyeth and Sun have also engaged in ongoing settlement discussions. Though there has been some indication that Sun is also considering market entry, Wyeth said that to date there has been no indication that Sun has shipped any product, and Sun said it has not yet decided on a launch date. As first filers, Teva and Sun both have 180-day exclusivity.

Negotiations between Teva and Wyeth that began in the summer were scheduled to resume in early 2008. Poussot said that the firm "knew that an at-risk launch of generic product was possible ... as there are always uncertainties in litigation. Wyeth entered into extensive negotiations with Teva beginning in the summer to determine if an agreement was possible that would be acceptable to all parties."

The negotiations intensified after a New Jersey district court denied the brand firms' motion for a preliminary injunction to block sales of the proton pump inhibitor. Wyeth and Altana have filed an appeal, and a trial date has not been set.

Wyeth claims the launch is in "clear violation" of the pantoprazole patent, no. 4,758, 579, which claims "certain compounds useful for inhibiting gastric acid secretion, including pantoprazole sodium, the active ingredient of Protonix," according to court documents.

"This is the basic composition of matter patent for pantoprazole and we believe that this patent is strong," Poussot said.

The '579 patent is to expire in July 2010, with a possible extension through January 2011 as a result of Wyeth's research regarding pediatric use of the product.

The impact of lost Protonix sales has the potential to be significant; as of September, sales revenue for Protonix were $1.4 billion. Poussot said Wyeth "will be looking across the business at selling, manufacturing, marketing, research and all other general administrative areas to capture cost savings," noting that the firm will revise its 2008 business plan and guidance for the year in January.

How Full A Launch?

Wyeth said plans to resume negotiations with Teva this month were usurped by the generic firm's decision to initiate its Dec. 21 launch at risk and to ship product. "Teva led us to believe that they would not launch a generic product in the interim," Poussot said.

Still unknown to Wyeth is how much generic product is in the channel. "It's difficult to assess today what has been shipped and put out in the market," Poussot said.

"We can't really gauge right now whether it's a head fake or a full launch," Wyeth Senior VP and President Global Pharmaceuticals Joseph Mahady said. "There is a lot of different information that we're getting, and frankly, the information that we're getting from wholesalers and distributors is still mixed. We have some who claim they've received products, some claim they're getting product ... we would not want to make any decisions until we had from our own sources a better perspective on what has been shipped."

Mahady added that, "Obviously we would not entertain reaching any agreement with Teva or any other party unless we had absolute audit right with respect to all material shipped, and we certainly would want to be assured in a contractually obligated way as to what was made available in the market prior to the cessation of shipping."

Teva Corporate Executive VP, Global Pharmaceutical Markets and CEO North America George Barrett called the firm's pantoprazole launch "relatively full," noting that most of the units shipped to customers will be shipped and recorded in 2008.

"The launch was complex, the critical elements being execution and working quickly and quietly," Barrett said. "This made it difficult to supply to all our customers."

An Apotex Aftershock?

While at-risk launches are nothing new for generic firms, Teva's move - which seems to be using product distribution more as a negotiating tactic than a business need in itself - brings to mind the decision by Apotex to launch a generic of Bristol's anti-coagulant Plavix (clopidogrel) in the wake of settlement negotiations. While Apotex ultimately lost the patent case, the incident illustrated the devastating impact that generic launches can have (¹ Also see "Bristol Extends Interim CEO Cornelius’ Reign, But Acquisition Rumors Persist" - Pink Sheet, 30 April, 2007., p. 3).

In the case of Protonix, analysts noted that Teva appears to have the upper hand in settlement negotiations, as the company gets to launch what it has already shipped, and has cornered Wyeth into deciding before Jan. 22 on an agreement or to pursue litigation.

But Wyeth Senior VP and General Counsel Lawrence Stein added that "Teva still sees important reasons why they would like a settlement as well."

"Both parties still have a changing environment and I remind you they are a party to wanting to have these ongoing discussions. Obviously for some reason they see a reason on their side to continue discussions," Stein said.

Wyeth expects the trial to begin in the second half of 2008, but will seek the earliest possible trial date, Possout said.

- Jamie Hammon (j.hammon@elsevier.com)

Teva Throws Wyeth Year-End Curve Ball With Launch Of Generic Protonix

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