The Zacks Analyst Blog Highlights: AstraZeneca plc, Mylan, Teva Pharmaceuticals, Dr Reddy's Laboratories and The Bank of New York Mellon

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Apr 03, 2012, 09:30 ET

CHICAGO, April 3, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include AstraZeneca plc (NYSE: AZN), Mylan Inc. (Nasdaq: MYL), Teva Pharmaceuticals Limited (Nasdaq: TEVA), Dr Reddy's Laboratories (NYSE: RDY) and The Bank of New York Mellon Corporation (NYSE: BK).

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Here are highlights from Monday's Analyst Blog:

AstraZeneca Drug Wins Favorable U.S. Ruling

AstraZeneca plc (NYSE: AZN) announced that the US court has declared the formulation patent of Seroquel XR to be valid. The patent covering the formulation of Seroquel XR expires in 2017 in both the EU and the US. The court ruled that the patent was infringed by Anchen Pharmaceuticals, Inc., Osmotica Pharmaceutical Corporation, Torrent Pharmaceuticals Limited, Torrent Pharma Inc., Mylan Pharmaceuticals Inc. and Mylan Inc. (Nasdaq: MYL).

A similar verdict was made by the District Court in The Hague, Netherlands, which ruled in favor of AstraZeneca and found Seroquel XR's formulation patent to be valid.

However, the decision comes as a contrast to the UK High Court's judgment, which ruled against the formulation patent protecting Seroquel XR and rendered it invalid. Seroquel XR is marketed as Seroquel XL in the UK. Teva UK Limited and Teva Pharmaceuticals Limited (Nasdaq: TEVA) had challenged AstraZeneca's Seroquel XR patent in December 2010. Similar patent challenges were made by Accord Healthcare Limited, Intas Pharmaceuticals Limited, Hexal AG and Sandoz Ltd. in March and April 2011.

Mylan Inc., Dr Reddy's Laboratories (NYSE: RDY) and Teva have launched their generic version of Seroquel in late March 2012. The Seroquel franchise generated sales of $5.8 billion in 2011. The entry of generic drugs in the market will hit AstraZeneca's top line.

Neutral on AstraZeneca

We are encouraged by the company's focus on the high-potential emerging markets and are pleased with the company's effort to drive the bottom line through cost-cutting initiatives and share buybacks.

However, we remain concerned about the generic competition faced by its key products. In 2011, the company lost revenues worth almost $2 billion to generic competition. The weak late-stage pipeline coupled with the slow Brilinta uptake also bothers us. We currently have a Neutral recommendation on AstraZeneca. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

BNY Mellon Case Partly Dismissed

On Friday, a U.S. district judge in San Francisco dismissed certain foreign exchange (FX) pricing-related allegations against The Bank of New York Mellon Corporation (NYSE: BK), thereby providing a huge relief to the company. The judge discharged five out of nine claims regarding over-charging the FX transactions while the remaining four were transferred to different state courts.

The accusations under the California False Claims Act against BNY Mellon were dismissed. However, the allegations that relate to breach of fiduciary duty, breach of contract, unfair business practices and fraud by concealment were transferred to the state courts. Moreover, the judge provided the plaintiffs with 21 days time to file an amended lawsuit.

BNY Mellon has been facing similar litigations for the past several quarters. Many states including New York, Florida, California, Virginia, Ohio and Massachusetts have filed lawsuits against the company over similar allegations, such as misleading state and public pension funds, private companies, universities and banks via a scheme that overcharges foreign currency transactions.

Similar Dismissals Earlier

In January 2012, BNY Mellon reached a partial settlement with the U.S. regulators regarding FX charges that were bought against it by the government. As per the terms of the deal, the company will be required to reveal how prices were determined for particular transactions. However, monetary settlement is yet to be reached.

Also, in November, BK Mellon won a partial dismissal of FX lawsuit filed by the state of Virginia seeking nearly $932 million in penalties and damages over FX trades. The Fairfax County Circuit Court Judge dismissed two out of the three charges that were filed against the company. But, the main accusation of Fraud Against Taxpayers Act remained.

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