Acadia, page-7

Yes, it was a massive jump in Acadia’s shareprice last night on news of the company’s success in defending patent challenges to Nuplazid - a 34% jump in share price, increasing the market cap by ~US$1.2bn.

While the market reaction might seem extreme, it’s also understandable.

This particular patent dispute with Indian generic manufacturer, MSN Labs, commenced over 3 years ago. MSN’s challenge was to a composition of matter patent for Nuplazid that is due to expire in 2030. Not only did Acadia win this one, court filings show it also resolved patent disputes with other generic developers with respect to this patent.

But the composition of matter patent wasn’t Acadia’s only win yesterday. The company also had a Claims Construction Order issued in its favour with respect to its formulation patent for Nuplazid, which is due to expire in 2038. In the Order, the Court adopted Acadia’s interpretation of key disputed terms of the patent. The case for that patent challenge is set for trial in December 2024. Steve Davis commented that establishing claims construction is an important milestone in patent litigation and that the second positive ruling underscored the strength of Acadia’s Nuplazid patent estate.

If Acadia was not successful in defending its patents, it would face the prospect of much earlier generic competition to Nuplazid. Acadia currently derives US$500m + p.a. from sales of Nuplazid in its first approved indication and is working hard to grow that revenue further by adding additional indications. As there is an average 75% loss of market share for an initial branded drug within the first year of generic entry to market (the so-called “patent cliff”,losing five or more years of patent protection on a leading drug has the potential to decimate a smaller company’s earnings.

The market understood the importance of this win to Acadia and re-rated the company accordingly.

https://www.businesswire.com/news/home/20231213441201/en/