Sun Pharma Shares Price Fall 5% on Court Injunction Blocking Leqselvi Launch

Shares of Sun Pharmaceutical Industries fell by as much as 5% on November 4 following a ruling by the US District Court of New Jersey, which issued a preliminary injunction in a patent dispute concerning the company's hair loss medication, Leqselvi. At 10:41 AM, Sun Pharma's stock price was priced at ₹1,786.70 on the National Stock Exchange (NSE).  

The injunction, granted to the US-based pharmaceutical firm Incyte, claims that Sun Pharma infringed on its patent. This ruling prevents the company from launching Leqselvi, intended for the treatment of severe alopecia areata, until either a favorable court ruling is issued or the patent expires in December 2026. Sun Pharma stated in an exchange filing, "We respectfully disagree with and intend to appeal this decision."

The U.S. Food and Drug Administration (FDA) granted approval for Leqselvi (deuruxolitinib) 8 mg tablets on July 25, 2024.

Leqselvi was a focal point during Sun Pharma's recent earnings call, as it was expected to generate around $200 million in sales over the next three to four years, representing a substantial revenue opportunity for the company.

The ambiguity surrounding Leqselvi's launch has led to a cautious outlook from analysts regarding Sun Pharma, prompting many to adjust their projections in light of the delays.

In response to the ruling, Sun Pharma announced plans to appeal the decision. However, the injunction presents a significant obstacle to the drug's launch timeline. Analysts believe that a royalty-based settlement between Sun Pharma and Incyte could be the most likely outcome, with the chances of such an agreement increasing amidst ongoing legal challenges.

In the worst-case scenario, an unfavorable judgment could prevent Sun Pharma from launching Leqselvi until the patent expires, further delaying its market entry. Any potential royalties associated with Leqselvi would rely on a settlement, which remains uncertain pending the court’s final decision, according to the company’s management. A costly or prolonged settlement could reduce the drug's net present value (NPV). Some industry experts are currently estimating a possible launch timeline for Leqselvi in FY26 as the base case.

Leqselvi (deuruxolitinib) received FDA approval on July 25, 2024, for treating adults with severe alopecia areata. Incyte Corporation and Incyte Holdings Corporation filed the patent infringement lawsuit and the motion for the injunction in the US District Court for New Jersey to prevent Leqselvi's launch.

Despite challenges with Leqselvi, Sun Pharma posted strong earnings for the July-September quarter. The company’s net profit rose by 28% year-on-year to ₹3,040 crore, surpassing analyst projections. Consolidated revenue from operations also grew by 9% to ₹13,291 crore, fdriven by strong growth in major markets, especially in the US.

To Summarize:

Sun Pharma faced a setback as a US court issued an injunction delaying the launch of its drug, Leqselvi, due to an ongoing patent dispute with Incyte. The company plans to appeal the decision, though analysts view a potential settlement as a likely path forward. In response to this development, shares declined by 5% on Monday, November 4. Despite this challenge, Sun Pharma reported a robust performance in the July-September quarter, with net profit rising 28% year-on-year to ₹3,040 crore and revenue from operations up 9% to ₹13,291 crore, supported by strong growth across key markets, particularly in the US.