"Even a long journey begins with a small step," is how Clal Finance analyst Jonathan Kreizman describes the acquisition by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) of the rights to Huntexil, a treatment for Huntington's Disease, for $26 million last week. This is a small acquisition by Teva standards, but Kreizman says that the pace of acquiring new molecules will pick up under Teva president and CEO Jeremy Levin.
"It is possible that the acquisition indicates the continuation of Jeremy Levin's practice at Bristol Myers Squibb, under which, by contrast to the past, Teva will avoid making massive acquisitions," says Kreizman. "Instead, Teva will buy molecules for a only a few tens or hundreds of millions of dollars, which will strengthen its core business in innovative drugs for the central nervous system, oncology, and pain. Notwithstanding the small size of this deal, the acquisition indicates that Teva has effectively already begun the process of strengthening its innovative operations, bringing a new set of tools to the fore following the change in management."
Levin, who was formerly a top executive at Bristol Myers Squibb Inc. (NYSE: BMY), was responsible for implementing its special strategy of making small and focused acquisitions of rights to drugs under development, assisting in bringing them to market, and reaping the profits.
Kreizman says that Huntington's Disease is a neurological disorder that affects 100,000 persons worldwide. It is caused by the death of brain cells, leading to dementia and memory loss, as well as physiological disabilities. Huntexil has undergone two separate Phase II and Phase IIb clinical trials in Europe and North America, but failed to achieve its primary endpoints in both of them, although it met the secondary endpoints. In both studies, patients had a slight, but statistically significant, improvement in motor measurements (the secondary endpoint), but no statistically significant improvement was seen in the modified Motor Score (mMS) measurements of voluntary movements, after built-in statistical adjustments.
"Both the US Food and Drug Administration (FDA) and European Medicines Agency (EMA) were unimpressed by the effect of the treatment, and sent the developer, NeuroSearch A/S (OMX: NEUR) back to the drawing board," says Kreizman. "To succeed, Teva will have to repeat the Phase III clinical trial in a different way, which is no easy task. However, Teva's new R&D chief, Dr. Michael Hayden, who previously worked on Huntington's Disease, is familiar with the details and believes that the risk/reward ratio is favorable for Teva. If it succeeds, Teva will receive a molecule in an orphan market with all that that implies."
Teva's shareholders are now waiting for December 11, when the company will hold an analysts' conference, at which Levin will finally present his new strategy for the company. Teva is keeping its strategy under wraps and is maintaining a low media profile.
"At this stage," says Kreizman, "there are only a few indications about the activities that Teva is planning to develop or, alternatively, to weed out. Here too, the acquisition of Huntexil in the neurological field does not say much about the future, since Teva and Cephalon's know-how and experience in the central nervous system field besides multiple sclerosis (Azilect, Provigil, Nuvigil, and Gabitril) indicate that Teva will continue to strengthen that activity."
Published by Globes [online], Israel business news - www.globes-online.com - on October 2, 2012
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