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Bausch Files Lawsuit Against Novartis' Sandoz, Shares Down

Shares of Bausch Health Companies Inc. BHC are down 12.9% in the week so far.  The company along with its wholly-owned subsidiary, Salix Pharmaceuticals, and Salix's licensor Alfasigma announced that they have filed a lawsuit against Sandoz Inc., the generics division of Novartis NVS.

The lawsuit alleges infringement of 14 Xifaxan patents by Sandoz's filing of an Abbreviated New Drug Application (ANDA) for Xifaxan 550 mg.

Consequently, the stock declined. Per Bausch, Xifaxan is protected by 22 patents, covering the composition of matter and the use of Xifaxan listed in the U.S. Food and Drug Administration's (FDA) Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book.

The drug is approved for the treatment of irritable bowel syndrome with diarrhea (IBS-D) in adults. Bausch’s Salix business continues to drive growth and contribute to the top line. We note that Xifaxan is one of the key drugs for the company and increased sales of the drug are boosting sales. Revenues from the drug increased 16% in the first half of 2019 and contributed significantly to Salix’s revenues of $954 million.

Bausch’s stock has gained 2.3% in the year so far against a decline of 10% for the industry.

 

We remind investors that Bausch was also involved in a patent litigation with Actavis, now a part of Teva Pharmaceuticals TEVA, in 2016. The company agreed to resolve the outstanding intellectual property litigation with Actavis regarding Xifaxan 550 mg tablets in September 2018. Per the agreement, the Salix Parties granted Actavis a non-exclusive license to the former’s intellectual property relating to Xifaxan 550 mg tablets in the United States effective Jan 1, 2028.

Bausch has currently narrowed its focus on seven products — Vyzulta, Siliq, Bryhali, Lumify, Duobrii, Relistor and SiHy Daily. These products have now been launched and hence the company’s performance in the second half of the year is expected to be strong. After a tumultuous period, Bausch started a rebuilding process. Even though there is still a long way to go, the company’s efforts to sell non-core assets and pay down huge levels of debt are commendable.

Zacks Rank & Another Stock to Consider

Bausch currently carries a Zacks Rank #2 (Buy). Another top-ranked stock in the healthcare sector is Incyte Corp. INCY with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings estimates for Incyte have gone up 12 cents to $2.56 for 2019 in the past 60 days.

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