This past Sunday Teva received final U.S. Food and Drug Administration approval to sell a generic version of Lotrel, which has annual U.S. sales of about $1.5 billion. But then a New Jersey court granted an emergency request made by Novartis for Teva to halt shipments of the drug. No one knows how much Teva was able to ship in that short period, CIBC analyst Elliot Wilbur said: “Though unclear how much inventory has been shipped, we would have to assume more than enough.”
This is no small case for TEVA. Analysts think that this drug can add between $180-$210 million to sales or about 9-12 cents a share. It appears that investors aren’t too worried. The stock traded at a 52 week high earlier this week, and while it has dropped over the last few days, the drop has been in parallel with the overall market, with no significant jump in volume. Perhaps investors are looking at the historical record: TEVA has a long track record of winning these types of patent battles.
The complacency worries me a bit. A Novartis win would possibly send TEVA stock down 5% or more. I would expect a pick up in volume in TEVA stock today with markets closed on Monday for Memorial Day, as investors square positions leading into the verdict.
Speaking of complacency, it’s interesting that very little has been made of this issue in the Israeli financial press. With almost the whole country owning TEVA either directly, through mutual funds or their pension funds, I would have thought that this would have attracted more attention.
Disclosure: Author’s fund is currently long TEVA.
TEVA 1-yr chart:
