TEVA: Tuesday is D-day
Written by: Aaron Katsman | May 25, 2007
By Aaron Katsman
IsraelNewsletter.com
Teva (TEVA) investors are anxiously awaiting Tuesday’s court decision regarding the patent infringement charge brought against it by Novartis (NVS). Novartis claims that its drug Lotrel has valid patent rights until 2017 and Teva’s generic version of the high blood pressure drug infringes on that patent. 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. Though 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 history. TEVA has a long track record of winning these types of battles.
The complacency worries me a bit. A Novartis win would possibly send TEVA stock down 5%, or maybe 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, though that position is subject to change at any time without notice.
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*** Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com <mailto:aaron@profile-financial.com>.
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