Shares of Bausch Health Companies, Inc. BHC gained 5.3% after it obtained a favorable ruling from the U.S. District Court of Delaware for one of its top drugs, Xifaxan (rifaximin).
Xifaxan 550 mg tablets are indicated for reducing the risk of overt hepatic encephalopathy (HE) recurrence in adults and for treating irritable bowel syndrome with diarrhea (IBS-D) in adults.
In the matter of Salix Pharmaceuticals, LTD et al v. Norwich Pharmaceuticals, Inc., the U.S. District Court of Delaware denied Norwich Pharmaceuticals' motion to modify the court's final judgment that prevents the FDA from approving Norwich's abbreviated new drug application (ANDA) for Xifaxan 550 mg before Oct 2, 2029. Consequently, Norwich's ANDA cannot be approved until Oct 2, 2029.
In February 2020, the company and Alfasigma S.p.A. received a Notice of Paragraph IV Certification from Norwich, whereby Norwich asserted that the U.S. patents listed in the FDA’s Orange Book for Xifaxan tablets, 550 mg, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Norwich’s generic rifaximin tablets, 550 mg, for which an ANDA has been filed by Norwich.
Thereafter, in March 2020, certain of Bausch’s subsidiaries and Alfasigma filed suit against Norwich in the U.S. District Court for the District of Delaware, alleging infringement by Norwich of one or more claims of the Xifaxan patents, thereby triggering a 30-month stay of the approval of Norwich’s ANDA for rifaximin tablets, 550 mg.
The court issued a final judgment in August 2022, stating that the U.S. patents protecting the use of Xifaxan 550 mg tablets for the reduction in risk of HE recurrence are valid and infringed, and the U.S. patents protecting the composition and use of Xifaxan for treating IBS-D invalid.
The decision prevents FDA approval of Norwich’s 550 mg ANDA until October 2029. Bausch appealed against the decision to the U.S. Court of Appeals for the Federal Circuit on Aug 16, 2022. Following the appeal, Norwich claimed to have removed the HE indication from its existing ANDA. Norwich filed a motion in the District Court requesting a modification of the decision to permit the FDA to approve their ANDA before October 2029. Bausch opposed this motion.
Xifaxan accounted for approximately 81% of the Salix reporting unit’s revenues in 2022. Salix generated revenues of $2.09 billion in 2022. Hence, an earlier-than-expected generic entry will adversely impact revenues.
The stock has gained 19% in the year so far compared with the industry’s rise of 4.4%.
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Bausch’s first-quarter results were disappointing due to decreases in sales across neurology, generics and dermatology. Nevertheless, the Salix business maintains momentum. Xifaxan’s revenues grew 7% in the quarter.
Zacks Rank and Stocks to Consider
Bausch currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare sector are Ligand Pharmaceuticals LGND, Novartis NVS and Spero Therapeutics SPRO. While Ligand sports a Zacks Rank # 1 (Strong Buy), NVS and SPRO carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 30 days, earnings estimates for LGND have increased by 63 cents to $4.79. LGND topped earnings estimates in two of the last four quarters and missed in the remaining two, the average surprise being 21.50%.
Over the past 30 days, NVS’ earnings estimates have increased to $6.67 from $6.58 for 2023. Novartis also surpassed estimates in all the trailing four quarters, the average surprise being 5.15%.
Over the past 60 days, loss estimates for SPRO have narrowed to $1.02 from $1.18 for 2023. SPRO topped earnings estimates in all of the last four quarters and missed in the remaining one, the average surprise being 67.54%.
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