The decision was a relief to investors concerned about a competitive threat to Enbrel, which had U.S. sales of $4.8 billion last year. Shares of Amgen closed up about 6% at $196.25 after the ruling.
“This is a key overhang removed,” Jefferies analyst Michael Yee said in a research note. “While an [expedited] appeal is in place and expected, we believe the worst-case fear is now gone.”
U.S. District Judge Claire Cecchi in Newark, New Jersey, rejected arguments by Novartis’ Sandoz unit that the patents covering Enbrel’s active ingredient until 2029 should not have been granted because their concepts were already contained in previous patents.
Enbrel has been on the U.S. market since 1998. It was developed by Immunex, which Amgen acquired in 2002.
Novartis said it would appeal the ruling to the U.S. Court of Appeals for the Federal Circuit. “Sandoz respectfully disagrees with the Court’s ruling, which prevents us from launching an additional treatment option for patients with autoimmune and inflammatory diseases,” said Carol Lynch, president of Sandoz U.S. and head of North America.
In recent years, U.S. regulators have acted to encourage the launch of biosimilar versions of pricey biologic drugs, but drugmakers, such as Amgen, have used litigation to extend patent protections and limit price competition for as long as possible. Biologics are made from living cells and are therefore difficult to copy with precision.
The U.S. Food and Drug Administration (FDA) said last year that biologic drugs account for almost 40% of U.S. prescription drug spending, and for 70% of the growth in drug spending between 2010 and 2015.
The U.S. has lagged behind Europe in use of biosimilars.
Pfizer Inc. holds rights to Enbrel in Europe, where biosimilar versions are available.
AbbVie has said that rival biosimilar versions of its multi-billion-dollar rheumatoid arthritis drug Humira (adalimumab) are available in Europe at discounts ranging from 10% to 80%.
The FDA in 2016 approved Novartis’ Erelzi (etanercept-szzs) as a so-called biosimilar, meaning it is not different from Enbrel in any clinically significant way, but is not identical as a generic drug would be.
Novartis and Amgen are also involved in litigation over a partnership to develop migraine drug Aimovig, which launched in the U.S. last year. Amgen is seeking to terminate the partnership, arguing Novartis has violated the terms due to an agreement by Sandoz to manufacture a rival migraine drug.
U.S.-listed shares of Novartis closed down 0.5% at $90.82.
Amgen is also suing Samsung Bioepis over its Enbrel biosimilar. That litigation remains under way, an Amgen spokeswoman said on Friday. Officials at Samsung Bioepis did not immediately respond to a request for comment.
(Reporting by Deena Beasley in Los Angeles Additional reporting by Jan Wolfe and Ankur Banerjee; editing by Shinjini Ganguli and Leslie Adler)