Teva Pharmaceutical Industries Ltd. (TEVA)’s plan to switch patients to a longer-acting version of its Copaxone treatment suffered a setback as a U.S. court ruling gave the $4 billion drug less than a year of patent protection.
The Petach Tikva, Israel-based drugmaker wants to move as many as half of its multiple-sclerosis patients taking daily Copaxone injections to a three-times-weekly version of the drug. The U.S. Court of Appeals decision to invalidate a 2015 patent may allow generic competitors such as Momenta Pharmaceuticals Inc. (MNTA) to lure away Teva patients with cheaper copies as early as 2014, said Marc Goodman, an analyst at UBS AG.
“This not only moves up the potential generic Copaxone launch into 2014 but it also doesn’t give Teva much time to convert patients,” said Goodman, who is based in New York. The analyst said he changed his earnings forecast to reflect a generic competitor by 2014 and a 15 percent patient conversion instead of a previously forecast 30 percent.
Time is critical for Teva as it seeks to switch patients to a 40 milligram dose of Copaxone, which was effective in lowering relapse rates in MS patients in a late-stage trial last year. Because Teva only expects the U.S. Food and Drug Administration to approve the long-acting Copaxone by early 2014, the extra year without generic competition would be key to moving its patients to the higher dosage.
‘Significant Portion’
“Teva wanted to switch a significant portion of its prescriptions to the 40 milligram dose but that will be de facto impossible if the market goes generic in May 2014,” said Ori Hershkovitz, a partner at Sphera Funds Management Ltd., a Tel Aviv-based health-care hedge fund.
Teva expects 30 percent to 35 percent of its patients to switch to the higher-dose injection, (highly unlikly IMO) Jon Congleton, senior vice president at Teva’s Global Medicines Group, said in a first-quarter earnings conference call. Congleton added that market research done by Teva showed as many as half of all Copaxone patients would transition to fewer weekly injections.
While four patents that expire in May 2014 were upheld by the U.S. Court of Appeals for the Federal Circuit in Washington, other patent claims expiring in September 2015 were invalidated. Momenta, based in Cambridge, Massachusetts, said in its annual report that it’s counting on the generic Copaxone to help the company return to profit. Basel, Switzerland-based Novartis AG (NOVN) has also challenged the Copaxone patents.
Hurdles
Generic drugmakers still face hurdles in getting their products to the market next year. Teva can seek a review before the U.S. Supreme Court and the company said it will appeal the decision. The FDA would still need to approve copies of the drug and Teva argues that the regulator should require lengthy clinical trials not typical for generic applications because Copaxone is a complex molecule.
Still, a generic approval in 2014 is increasingly possible as the FDA demonstrates more willingness to approve complex drugs, said Ronny Gal, an analyst at Sanford C. Bernstein & Co. While receiving approval will be “no simple feat,” both Mylan Inc. and Momenta have indicated they may get 2014 approval for the drug and the FDA has not yet requested any additional work beyond what Momenta has submitted, according to Elliot Wilbur, a New York-based analyst at Needham Group Inc.
‘Complex Generics’
“Over the past two years, the FDA appears to have shifted its approach to complex generics,” said Gal, estimating the chances of a generic entrant next year at 50 percent. “The agency approved most pending complex products and it has also provided guidance alleviating clinical requirements for several other drugs previously considered ’undoable’,” he said, citing approval of generics such as lower-cost copies of Sanofi-Aventis SA’s Lovenox anti-clotting drug in 2010.
Teva now markets a 20-milligram daily injection of Copaxone, which generates more than five times the revenue of its second best-selling branded drug Treanda. The company wants to switch patients to the longer-acting Copaxone not only because its more convenient but because that formulation would have patent protection through 2030. Teva said earlier this month that injecting 40 milligrams of Copaxone three times a week in a 12-month Phase III study in 1,524 patients reduced relapse rates by 34 percent compared with a placebo.
Multiple sclerosis causes the immune system to attack the insulating tissue around nerve fibers. It stops nerve cells from sending signals, sapping patients’ energy, blurring their vision and slowly depriving them of mobility, balance and coordination. Copaxone, which controls about 40 percent of the MS market, is an injection designed to work with the body’s immune system to cut relapses of the disease.
Teva’s American depositary receipts fell 53 cents, or 1.3 percent to $40.73 at the close in New York trading July 26. Momenta, which is developing a generic version with Novartis’s Sandoz, jumped 12 percent to $17.34.
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