Merrill Lynch: Copaxone market position solid

"Investors are too pessimistic about the MS drug's prospects."

Merrill Lynch continues to believe that Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) investors are too pessimistic about Copaxone’s near and medium term prospects and says that the multiple sclerosis treatment's market position is solid and that its risk/reward is favorable.

Merrill Lynch analysts Haim Israel, Gregg Gilbert, and Sumant Kulkarni expect news about Copaxone in the near future, beginning with an US Food and Drug Administration (FDA) ruling on lower dosage of the drug around January 1. Merrill thinks the FDA could need more time to review the formulation. Later, Sandoz AG's and Momenta Pharmaceuticals Inc.'s (Nasdaq: MNTA) 30-month stay of approval expires on January 16, making a generic approval theoretically possible, though the analysts think this unlikely because technical and regulatory hurdles remain.

The analysts note that Copaxone is the leading multiple sclerosis treatment in the US, with a 40.3% market share. While Novartis AG's (NYSE:NVS; LSE: NOV; SWX: NOVZ) oral treatment, Gilenya could gain market share during 2011, Teva could file a new drug application (NDA) with the FDA for its own oral treatment, Laquinimod, in the first half of the year. Finally, although Copaxone's patents are valid through 2014, Sandoz and Mylan Inc. (NYSE: MYL) might try to launch generic versions sooner.

The analysts say that their "base case" of limited US generic competition in 2014 give Copaxone's contribution a net present value of $14 per share; a generic rival in 2011 could result in $5 of downside risk; and if there is no generic competition until 2020, this could result in a $11 net present value upside potential.

The analysts give Teva, led by CEO Shlomo Yanai , a target price of $68, compared with yesterday's close on Nasdaq of $51.20. The share price fell 1.3% on the TASE today to NIS 181.50.

Merrill Lynch was bought by Bank of America in 2008 and is now a wholly-owned subsidiary of the bank.

Published by Globes [online], Israel business news - - on December 23, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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