Biogen Idec the fast growing biotech, which has risen more than 50% over the past twelve months -- won't slow down anytime soon. And that's according to new interim data from a long-term study of its multiple sclerosis, or MS, treatment Tecfidera.
The continuing study showed no new problems in patients taking the drug for at least four years. The patients in the group consisted of those who had participated in Biogen's earlier phase 3 studies, in which the efficacy of Tecfidera was favorably compared to the leading MS treatment on the market, Teva Pharmaceutical's (NYSE: TEVA ) Copaxone.
Tecfidera was approved in March, and is considered a major threat to existing treatments from Teva Pharmaceutical, Novartis (NYSE: NVS ) , and Sanofi (NYSE: SNY ) . Tecfidera is an orally administered treatment, whereas the majority of other MS treatments are injected. The only other two orally administered MS drugs currently on the market are Novartis' Gilenya and Sanofi's Aubagio.
Tecfidera generated $192 million in its first full quarter on the market, more than tripling Wall Street expectations, and analysts believe that it could achieve annual peak sales exceeding $3.3 billion -- making it the most important product in Biogen's fairly small portfolio of drugs.
Besides Tecfidera's strong market debut, Biogen has made some major advances with its other two top sellers, Tysabri and Avonex.
Back in April, Biogen acquired Elan's 50% stake in Tysabri for $3.25 billion, which now allows it to book 100% of the treatment's revenue. The drug generated $1.6 billion in revenue in 2012, an 8% year-over-year increase from 2011.
Last year, Biogen introduced the Avonex Pen in the U.S., which makes the administration of the MS drug more convenient. The introduction of the Avonex Pen in U.S., Canadian, and EU markets could help Avonex maintain positive sales growth, despite the risk of cannibalization by Tecfidera.
Tecfidera's gain is Teva's pain
Teva is the company that stands to lose the most as Tecfidera gains market share among MS patients. Last quarter, sales of Teva's leading MS treatment, Copaxone, rose 9% year over year to $1.1 billion, accounting for 22% of the company's total revenue.
Copaxone's primary disadvantage is that it is injected, and not orally administered like Tecfidera. In addition, a U.S. court invalidated a 2015 patent for Copaxone in July, opening up the doors for generic competition as early as next year. To make matters worse, Copaxone causes a rapid loss of subcutaneous fat at the injection point, which results in large, permanent depressions in the skin in 45% of patients.
In August, Copaxone had a 35.7% market share in MS treatments in the United States, down from 36.2% in July. At the same time, Tecfidera's market share climbed from 9.3% in July to 11.8% in August. Analysts at UBS project this trend to continue, with Copaxone's share dropping to 25.4% by 2014.
Major safety advantages over Novartis and Sanofi
Novartis and Sanofi could also be completely pushed out of the market for MS treatments by Biogen. Novartis' Gilenya was the first ever oral MS treatment, approved by the FDA in 2010. After its approval, sales soared -- climbing from $494 million in 2011 to $1.2 billion in 2012.
Peak sales estimates initially exceeded $2 billion, but were reduced after the company announced that 15 MS patients with cardiovascular conditions died after being treated with Gilenya. The incident triggered a major safety review in the U.S. and Europe and resulted in additional label warnings. In July, a patient on Gilenya developed a rare viral inflammation of the brain.
Gilenya generated $464 million in sales last quarter for Novartis, a 66% year-over-year gain that only accounted for 3% of its total revenue. Therefore, even if sales slow, due to Tecfidera's rising market share, it won't be a major loss for Novartis investors.
Sanofi's Aubagio, which was approved by the FDA last September, was the second oral MS treatment. However, Aubagio also had a very unattractive side effect profile -- during clinical trials, patients showed abnormal liver tests, hair loss, nausea, and diarrhea. Animal tests indicated that the drug could also cause birth defects, which led to the drug being banned from being used by pregnant women. However, like Novartis, Sanofi is not heavily dependent on Aubagio for its future top line growth.
By comparison, Tecfidera's side effect profile is milder, with the main issues being itching and burning skin, flushing, nausea, and gastrointestinal problems.
The Foolish takeaway
Although it's tempting to sound an "all clear" on Biogen and claim that rising sales of Tecfidera will boost the stock to new highs, investors shouldn't get too carried away. Biogen still has to prove that it can continue chipping away at Teva's market share and eventually replace other first-line treatments like Merck Serono's Rebif and Bayer's Betaseron.
For now, however, the future looks bright for Biogen. Symphony Health projects Biogen's share of the MS market could rise from its current 33% to 50% by 2017 -- making it the dominant company in the field.
the fast growing biotech, which has risen more than 50% over the past twelve months -- won't slow down anytime soon. And that's according to new interim data from a long-term study of its multiple sclerosis, or MS, treatment Tecfidera. FULL STORY
