FOREX WORLD TREND

A U.S. judge has upheld a patent for Merck & Co.'s (MRK) best-selling product, the asthma and allergy medication Singulair, handing Merck a victory in its battle to ward off early generic competition for the drug.

Wednesday's ruling by Judge Garrett Brown in federal court in Trenton, N.J., means that Teva Pharmaceutical Industries Ltd. (TEVA), the Israeli generics manufacturer that challenged the Singulair patent, won't be able to start selling copycat versions in the U.S. until the expiration of patent protection in 2012. Teva could, however, appeal the decision in an effort to sell copies before then.

Merck shares rose 51 cents, or 1.7%, to $31.23 while Teva was up 40 cents at $ 51.19.

Singulair was the ninth-bestselling prescription drug in the world last year, according to drug-data provider IMS Health. For the six months ended June 30, worldwide sales rose 6% to $2.3 billion. U.S. sales - those directly at stake in the Teva patent dispute - rose 6% to $1.5 billion in the first half of 2009.

Many analysts and legal observers thought Merck had the upper hand in the case because Singulair was an innovative approach to treating asthma when it hit the market in 1998.

But at a February trial in Trenton, Teva lawyers argued that the patent for Singulair was invalid because prior research would have taught anyone skilled in the art of drug development how to invent Singulair. Under patent law, so-called "prior art" can be grounds for invalidating a patent's claims. Teva also argued the patent was unenforceable because Merck misled the U.S. Patent and Trademark Office when it applied for the patent.

Merck's lawyers and witnesses disputed these claims, arguing that researchers at the Whitehouse Station, N.J., company took a "tortured path" to developing the tablets, one marked by exhaustive trial and error.

Brown rejected Teva's allegation that the Singulair patent was "obvious," writing in his ruling that the patent is "valid and enforceable," and that Teva's application to market a generic copy infringes the patent. He also issued a permanent injunction barring Teva from selling generic Singulair until the patent expires.

"We think the court appropriately ruled that the U.S. patent for Singulair is valid and enforceable," said Merck spokesman Ron Rogers.

Teva said in a statement it's reviewing the court's decision to determine its next course of action.

Teva had applied for U.S. Food and Drug Administration approval of a generic version of Singulair in 2007. Merck responded by filing a patent-infringement lawsuit against Teva in U.S. District Court for the District of New Jersey. Under federal law, that triggered a 30-month stay of FDA approval of Teva's application; the stay is set to expire Saturday.

Rogers said Wednesday's decision also resolves a second lawsuit Merck filed against Teva in January regarding Teva's application to sell an oral granule formulation of the drug - which can be given to children mixed with applesauce. Both parties previously agreed Wednesday's ruling would apply to the second case as well, Rogers said.

Merck had expressed confidence in its case against Teva. In July, Chief Executive Richard Clark said in an interview the company had no contingency plan in the event of a loss, saying "if you feel you have a very strong position, you don't need a contingency plan."

Another threat to Singulair's patent, however, arose in May when the U.S. Patent and Trademark Office ordered a re-examination of its claims, saying new questions had been raised about their "patentability." Article One Partners LLC, an online community that pays members who unearth previously undisclosed evidence related to patent validity, had requested the re-exam, citing information that wasn't brought to the attention of the patent office when it first reviewed Merck's application in the 1990s. The re-exam is pending.
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