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The judge rejected Momenta/Sandoz and Mylan/Natco’s claims that the COPAXONE® patents are invalid and unenforceable and found that the purported generic versions of COPAXONE® for which Momenta/Sandoz and Mylan/Natco seek Food and Drug Administration (FDA) approval infringe those patents. This ruling should prevent the FDA from approving, and the defendants from selling their purported generic versions of COPAXONE® in the U.S. until the Orange Book patents expire on May 24, 2014.

As a result of this ruling, Teva also believes that the defendants will be enjoined from selling their products until the process patent expires on September 1, 2015. Furthermore, any purported generic version of COPAXONE® would need to obtain FDA approval prior to being made available to the public. At this point, it is unclear what the requirements would be for approval of a purported generic synthetic peptide.

In an earlier note to clients, analysts Randall Stanicky, CFA and Dana Flanders of Canaccord Genuity stated:  "Should TEVA win and gain patent protection into 2015, Street numbers would have to move higher and lifecycle
management strategies come into play (SONG and GALA studies are on track and both products could hit the market by ’15). That said, we expect actual share reaction to be more exaggerated."

The analysts see a solid outlook beyond the Copaxone decision, stating: "There are a host of catalysts coming up including new CEO (May), GALA data (July) and R&D day (September) that combined with several product catalysts and a solid P&L outlook set the stock up well for H2/2012."

It appears that TEVA's valuation is still depressed, and some expect that the gap to pharma should narrow. "We think the 30%+ discount to big pharma (ex-BMY) is unsustainable on a positive trial decision. The stock trades at 7x 2013E EPSE or 8.8x if we remove US Copaxone NPV and associated EPS where we have taken a fresh look at our Copaxone model," wrote Stanicky whose firm has a $52.00 price target and a BUY recommendation for shares of the worldwide developer/manufacturer of pharmaceutical products which offers generic pharmaceutical products in various dosage forms, including tablets, capsules, ointments, creams, liquids, injectables, and inhalants; and provides basic chemical entities, as well as specialized product families, such as sterile products, hormones, narcotics, high-potency drugs, and cytotoxic substances.

Disclosure: None

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