Allergan PLC shares dropped 5% in extremely heavy afternoon trade Monday after a Texas district court judge ruled against the company in a patent lawsuit regarding the company’s key billion-dollar dry eye medication Restasis. “There is no doubt that Allergan has invented a useful and successful pharmaceutical product. It has been richly rewarded for that invention,” Judge William Bryson said, adding, “the Court has concluded that Allergan is not entitled to renewed patent rights for Restasis in the form of a second wave of patent protection.” Allergan had previously made an unorthodox agreement with a New York state-based American Indian tribe in order to protect Restasis patents from challenges made through the U.S. Patent and Trade Office’s inter partes review process, which is separate from any court decisions. The company, which has been widely criticized for the move, including by lawmakers, has said that an district court ruling against it would allow a generic Restasis to “enter the market many years in advance of the listed patent expiry dates,” or 2024. Restasis, which is used for eye inflammation, brought in $1.4 billion in revenue last year, second only to Allergan’s top-selling Botox. Allergan shares have dropped 20.7% over the last three months, compared with a 3.9% rise in the S&P 500 .
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