Halozyme Therapeutics faces a significant challenge to its patent portfolio as the Patent Trial and Appeal Board has instituted a patent grant review (PGR) against the company amid an ongoing infringement lawsuit with Merck & Co. The development prompted a decline in Halozyme shares of as much as 2.9%.
Patent Review Impact on Legal Strategy
Wells Fargo analyst Mohit Bansal highlighted the implications of the PGR institution in a note to clients, stating that it "likely reduces the probability of Halozyme prevailing in the patent infringement case." The analyst emphasized that Halozyme winning the infringement suit represents a "bull case" that has been frequently cited as a potential source of upside for the company.
"Institution of MRK's PGR lowers the probability of this bull case," Bansal wrote, referring to Merck's successful petition for the patent review.
Market Response and Company Position
The market reaction reflected investor concerns about the weakened patent position, with shares declining following the Wells Fargo analysis. The patent infringement case outcome had been viewed as a key catalyst for potential stock appreciation, making the PGR institution particularly significant for investors.
Despite the development, Bansal noted that Halozyme has previously downplayed the significance of such patent proceedings, suggesting the company maintains confidence in its overall intellectual property strategy.
Ongoing Legal Proceedings
The patent grant review represents another layer in the complex legal battle between Halozyme and Merck. The PGR process allows the Patent Trial and Appeal Board to review the validity of patents, potentially invalidating claims that form the basis of infringement lawsuits.
The institution of the review indicates that the board found sufficient merit in Merck's challenge to warrant a full examination of Halozyme's patent claims, adding uncertainty to the ongoing litigation between the two pharmaceutical companies.
