JAZZ Gains over Long-Awaited News on Generic Xyrem Lawsuit

Investors received word Monday morning of a positive ruling on Jazz Pharmaceuticals’ (NASDAQ:JAZZ) Xyrem patent case with Roxane Laboratories, a subsidiary of Boehringer Ingelheim. In 2010, when Roxane filed an Abbreviated New Drug Application (ANDA) for a generic form of Jazz’s narcolepsy treatment, Xyrem (sodium oxybate), Jazz submitted a patent infringement suit seeking a permanent injunction on Roxane’s version of the drug. The drug is by far Jazz’s biggest product, grossing $233M in 2011, hence the market’s reaction to the news on Monday. At noon, shares were up 13% to $54.70.

JAZZ is, in fact, trading out of its 52-week range today, as the patent suit has been hanging over investors for nearly two years since Roxane filed the application for the generic in October of 2010. Jazz submitted its retaliatory lawsuit in a timely manner and Roxane’s ANDA was suspended until the earlier of a) 30 months from the original filing time, or b) a court decision on the patent suit. Although Monday’s announcement is not the final word, analysts are calling it a win and shares have reacted in kind. A Jefferies analyst reports that the ruling is largely in favor of Jazz, with zero agreements for Roxane. A more detailed report on the ruling will likely come directly from the company soon, but investors are rallying on the preliminary results and shares should be strong in the near-term. Just last week, on the 11th, Jazz reported a new patent that strengthened the Intellectual Property case for Xyrem. The drug is the only oral formulation approved by the FDA for both cataplexy and excessive daytime sleepiness in patients with narcolepsy.