Analysts predict that Azilect can become the next blockbuster drug of Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA), and that sales have the potential to grow, but not in the short term.
Bank Hapoalim analyst Gilad Sarig says, "The results of the trial are revolutionary and especially significant for patients. If we previously talked about sales of $200-250 million for Azilect, things now look different and sales of over $1 billion are possible, but not overnight." He noted that Teva's announcement lowers the short-term risk for the company and increases its long-term potential.
IBI Investment House analyst Noa Weissberg predicts, "Azilect sales will easily exceed $1 billion," and that it will be another blockbuster drug for Teva. "The product is jointly distributed with Lundbeck in Europe, and when marketing began in the US, investors were disappointed that Lunbeck wasn’t marketing there too. This now appears to be a good thing, because Teva will accrue all the revenue and profits from Azilect sales in the US."
Clal Finance Batucha analyst Gal Reiter says that Teva now has a second original drug alongside Copaxone. "If we previously estimated Azilect sales at $300 million, we now predict double this amount. However, it will take time before Azilect will be become significant."
Leader Capital Markets analyst Yoav Burgan is bucking the tide. He notes, "If the FDA approves the change in indication, Azilect will become the first drug in the world for treating progression of Parkinson's disease. The problem is that this 'if' is a very big one. It is not at all certain that the FDA will change the indication, and we'd be optimistic to think that this will happen in 2009."
Psagot Investment House analyst Limor Gruber told "Globes" that Azilect sales could reach $150 million this year, and could reach $1 billion or more in a few years. She reiterated her "Outperform" recommendation for the company and target price of $55. Teva closed at $42.50 on Nasdaq yesterday.
Gruber said that the immediate reason for increased Azilect sales to a total of $37.5 million in the first quarter of 2008, 50% more than in the corresponding quarter of 2007, is the fact that US Food and Drug Administration (FDA) approval of Azilect for the treatment of Parkinson's disease is only a technical matter, since the drug is already on the market for other indications, and its safety and side effects are known.
Gruber noted, "Doctors also read the studies, and the trial results will be an incentive for them to prescribe Azilect for patients. Presumably, many doctors will now do so."
Gruber cautioned, however, that most of the $4 billion Parkinson's disease market comprises generic drugs, which cost 20-30% of Azilect. This will affect Azilect sales and its ability to win a share of the market from other treatments for the disease.
Gruber said, "It's hard to know how fast Azilect will be adopted and how many prescriptions will be written for it. It's hard to sign off and declare whether sales will exceed $1 billion a year and when they will be exhausted. Although Copaxone sales doubled in the past four years, they rose much faster in the beginning. Its potential may be exhausted by 2011. This scenario conforms to Teva's 20-20 strategy of $20 billion in sales and a 20% profit margin in five years."
Gruber also notes that, assuming that Teva applies to the FDA to approve Azilect for Parkinson's disease by the end of 2008, the procedure could take until the end of 2009. "In 2009, approval of the results might lead to an upward revision in forecasts for Teva for that year, which is currently less than $3 per share," she said.
Gruber added that the timing of the Azilect announcement to last week's announcement by Mylan Laboratories Inc. (NYSE: MYL) and India's Natco Pharma Ltd. (BSE: 524816) to distribute a generic version of Copaxone, was coincidental. "We've been waiting for the Azilect trial results, since Teva announced in its financial report for 2007 that they would be ready within about six months," she said.
Gruber added, "I think that the Azilect trial results should calm investors worried by the Mylan and Natco's announcement about generic Copaxone last week. This was a step in preparation for a situation in which we see Teva launching alternatives to Copaxone so that if its patent expires, someone will be able to produce a generic version of it."
Published by Globes [online], Israel business news - www.globes-online.com - on June 16, 2008
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