08:46 AM EDT, 04/12/2024 (MT Newswires) -- RBC notes that Thursday's price movement on the TSX, for Bausch Health ( BHC ) (+1%)/ Bausch + Lomb ( BLCO ) (-4%) suggests the market believes the probability of a BLCO distribution has declined following the positive Appellate Court affirmation of the District Court Xifaxan ruling.

According to a Bausch Health ( BHC ) statement, on Thursday, the U.S. Court of Appeals for the Federal Circuit affirmed the May 2023 US District Court decision that had denied Norwich Pharmaceuticals, Inc.'s motion to modify the court's final order preventing the FDA from approving its abbreviated new drug application (ANDA) for XIifaxan (rifaximin) 550 mg before Oct. 2, 2029. However, the Court of Appeals also affirmed the August 10, 2022 decision of the District Court that invalidated certain US patents protecting the composition and use of Xifaxan for treating IBS-D.

RBC analyst Douglas Miehm notes that Norwich could file a new ANDA for the IBS-D indication and pursue another two years of litigation in hopes of a positive outcome, which Miehm believes could occur in 2026 at the earliest. Amneal Pharmaceuticals has also filed a skinny-label ANDA for the IBS-D indication, where the 30-month stay ends in late August 2026.

"While we acknowledge that the recent Amneal ANDA filing added complexity and risk to our outcome work, our updated scenario analysis indicates that the market is assigning a ~32% chance of a distribution vs. our belief that the odds should be closer to 60%, as we think the approximately one-year difference between the worst (late 2026) and best (Jan 2028) case generic Xifaxan scenarios should contribute to a higher probability of a distribution vs. the 32% noted."

Maintaining a US$12 target, Sector Perform rating.