Bausch Health soars amid skinny label court decision vs Norwich over Xifaxan drug (update)

Update 2:30pm: Adds analyst comment.

Bausch Health (NYSE:BHC) soared 25% amid a court ruling related to the company's "skinny label" decision versus Norwich Pharma over its Xifaxan drug for irritable bowel syndrome.

A federal court judge in Delaware denied Norwich's motion to modify an earlier judgment that prevents the US FDA from approving Norwich's Xifaxan (rifaximin) generic until Oct. 2, 2029.

The court decision comes after the same judge in July indicated a patent case on Xifaxan would not be ruled in Bausch's favor. Bausch Health (BHC) shares plunged more than 40% on July 28 in the wake of the court's ruling.

Norwich filed an amended abbreviated New Drug Application (ANDA) with a "skinny label" seeking approval for irritable bowel syndrome with diarrhea indication, according to an RBC note earlier this month. The existing district court ruling prevents the FDA from approving Norwich's ANDA until the expiry of the last hepatic encephalopathy patents in October 2029. Norwich was seeking an amendment to the district court ruling.

"While we view this ruling as positive for BHC, we need to further explore the timelines of potentially other generic entrants that might target only the IBS-D indication," RBC analyst Doug Miehm wrote in on Wednesday. "We also see this ruling as positive for BLCO shares as this increases the likelihood of a potential BLCO distribution."

Bausch & Lomb (BLCO) shares rose 2.5%.

More on Bausch Health

• Bausch Health: Bullish On Long-Term Prospects, Awaiting Subsiding Headwinds
• Bausch Health: There's Still Uncertainty
• Bausch Health sheds 10% as FDA grants tentative approval for Xifaxan generic