Scenario #2: Allergan And The Mohawks Win The Appeal, Win The IPR
This scenario could prompt lawmakers to get involved in an attempt to void the decision. Senator Claire McCaskill has drafted a bill that disallows tribal sovereign immunity to be used to block U.S. Patent and Trademark Office review of patents. The bill has not been signed yet. If lawmakers were to successfully get the bill passed it could create another legal hurdle for Allergan and the Mohawks, assuming sovereign immunity was used to successfully defend against an IPR.
Allergan would likely retain the economics from the Restasis patents for a few more quarters before lawmakers tried to undo the decision. It could create more negative headwinds for Allergan’s brand and outrage from the public over extended protections for the high price of Restasis. There could be extreme volatility for the stock while lawmakers publicly challenged any IPR ruling on behalf of Allergan and the Mohawks.
Conclusion
The fact that AGN jumped on recent market chatter suggests the loss of the Restasis patents is not price into the shares. In my opinion, Allergan and the Mohawks have the odds stacked against them. In December the PTAB ruled the Mohawks waived sovereign immunity when they filed patent infringement claims in federal court. Judge Bryson has also looked askance on the Mohawk deal. Challenging the PTAB decision could create more negative sentiment for Allergan and its brand, with limited upside. If AGN bounced 3% on an IPR stay then how far will the stock sink on [i] an IPR loss and [ii] Mylan’s launch of generic Restasis? AGN remains a sell.
