The moment Teva Pharmaceutical Industries Ltd. (Nasdaq:TEVA; TASE:TEVA) investors feared but also impatiently awaited has arrived. Biogen Idec and Elan announced yesterday that the US Food and Drug Administration (FDA) had approved their drug Antegren for treating multiple sclerosis patients.
Antegren, or Tysabri to give it its new name, competes with Teva's ethical drug Copaxone, which sells at an annual rate of $1 billion. Copaxone currently has 31.7% of the market, and is an important contributor to Teva's revenue.
Sentiment towards Teva stock has improved a little lately, but cumulatively, since mid-June, it has lost 21% of its value. There is no shortage of reasons for the decline: weakness in the generic drugs market in general; poor results from other generic drug companies and fears that Teva, the market leader, will fall into line with the others; the continuing legal saga concerning epilepsy treatment Neurontin; and above all, the fear that Biogen Idec and Elan's new multiple sclerosis drug would take substantial market share away from Copaxone. On the Tel Aviv Stock Market today, Teva closed 1.1% off.
Teva said in response to the approval for Antegren, "This was expected. The announcement gives no new data about the effectiveness of the product. Copaxone has demonstrated its effectiveness in research spanning ten years, and here we have a product backed by only one year's research. Because of the way it is administered, which is very invasive (the drug is given through monthly injection at a clinic - G.P.), we do not see patients hurrying to abandon Coapxone in favor of the product."
Teva also said that the profile of the drug was not perfect, and that patients had reported drops in blood pressure, shortness of breath, and chest pains. "This is a drug taken for life, and since Copaxone is free of these effects, we are sure that it is the most effective and safe over time."
Asked whether Teva intended to provide projected sales figures for Copaxone in 2005, when Tysabri will reach the market, Teva's spokesperson responded that "it is still to early to enter into such estimates; we must first see them reaching the market and starting to sell."
Tysabri brings good news as far as reducing the rate of relapses is concerned, but gives rise to several questions. From Biogen's announcements up till now, it is not clear whether the drug also relieves patients' disability, one of the most important parameters in measuring quality of life. Apart from this, the FDA gave approval to the drug after a single year of research, so that there is no information about the drug's long-term effects.
"It's hard not to be reminded of a similar instance, namely the approval of Merck's Vioxx," says Union Bank of Israel analysts Bernard Manor. "Biogen claims that the the severe side effects are not common, but this has to be seen in follow-up research covering a larger number of patients over time. Vioxx was approved after one year of research, and it turned out that, after it is taken for 18 months, the likelihood of heart attacks rises substantially. The problem with Tysabri is that it is a new, original drug, which does not come to market after long clinical documentation. This compares with a decade of research into Copaxone."
According to the data supplied by Biogen and Elan, research carried out over a year showed that it reduces the rate of relapse in patients by 66%, compared with about 30% for Copaxone and the Interferons. The file was first submitted for approval to the FDA on May 25, and yesterday's publication of the approval was close to the end of the maximum period for receiving a response from the FDA. Incidentally, several Biogen executives have sold shares recently, giving rise to assessments in the market that the FDA's response would be negative.
"I believe that the drug that will take the hardest blow will be Serono's Rebif," says Manor. "In any event, it's important to understand that the rate of market penetration will be slow, and it is likely that Tysabri's market share will come mainly from new prescriptions. This is a drug that treats severe symptoms, so patients will not take risks if Copaxone or Rebif have a positive effect on them. This is not a matter of ice cream or coffee - we're talking about something critical."
Manor thinks that the FDA approval for Tysabri and the recent developments surrounding the drug are more than priced into Teva stock. A new report from Advest released yesterday before the FDA approval was received shows that they agree.
Advest's analysts team led by Andrew Forman raised its recommendation for Teva from "Buy" to "Strong Buy" and its target price from $30 to $36, saying that the threat to Copaxone from Antegeren was less than the market supposed, and that the risk was already factored into the share price.
Published by Globes [online] - www.globes.co.il - on November 24, 2004