Biogen Multiple Sclerosis Drug May Become Blockbuster


Biogen Idec ( BIIB ) hit pay dirt with the launch of its potential blockbuster multiple sclerosis drug Tecfidera.

The biotech drugmaker rang up $192 million in sales from Tecfidera in the second quarter, its first report on the oral therapy for MS since its U.S. launch in April.

Biogen said $110 million of Tecfidera sales came from underlying patient demand, smashing consensus estimates for $75 million. Another roughly $82 million came from pre-ordered inventory.

"I think this was the best launch in the history of MS drug launches," said Robert W. Baird & Co. analyst Chris Raymond. "You've got the best of both worlds. It's an oral therapy for a chronic disease, which is an advantage. Also, the incumbent oral MS drugs, Gilenya and Aubagio, have safety-related deterrents."

The National Multiple Sclerosis Society describes MS as a chronic, often disabling disease attacking the central nervous system -- made up of the brain, spinal cord and optic nerves. MS can cause anything from numbness in limbs to paralysis or vision loss. But the organization notes that new treatments and research advances are giving new hope to people affected by MS.

Tecfidera's safety profile, Raymond adds, is "far superior to anything that's out there."

The most common adverse reactions for Tecfidera are flushing and gastro-intestinal issues such as abdominal pain, according to Biogen.

Raymond expects Tecfidera to post $680 million in global sales this year, $1.7 billion in 2014, and $2.8 billion in 2016.

Trio Of Oral MS Drugs

Tecfidera treats people with relapsing forms of MS, including relapsing-remitting MS ( RRMS ), the most common form of the disease. Patients take a Tecfidera pill twice daily. Canada approved it in April, and Australia in July.

Tecfidera is the third oral treatment for MS to come to market. Gilenya fromNovartis AG ( NVS ) won approval in 2010 and Aubagio fromSanofi ( SNY ) got the nod in 2012.

Tecfidera got off to a fast start in terms of the number of physicians who prescribed it and the number of patients who went on the treatment, Tony Kingsley, Biogen's executive vice president of global commercial operations, told IBD.

More than 3,500 physicians have prescribed it. About 25% of Tecfidera patients were not on a prior therapy, while about 75% switched from a different disease-modifying MS therapy.

Sometimes physicians may be hesitant to prescribe a drug that just launched, Kingsley says. "But the broad number of physicians writing prescriptions and putting newly diagnosed patients on Tecfidera are positive indicators about the broad acceptance of the product in the market, and that people think it has a very good profile," he said.

According to drug tracker IMS Health, Tecfidera outperformed all other MS drugs in the first three months after its launch.

"In the upcoming quarters, we expect Tecfidera new-prescription volume to remain healthy, but (it) will moderate to more closely reflect the underlying patient start-and-switch dynamics of the MS market," Kingsley said on Biogen's second-quarter conference call.

There is a wild card, however. In May, Biogen announced it was granted a European patent that extends until 2028 and covers the expected EU Tecfidera label dose of 480 milligrams. But the company also said there was an expected delay to the launch in the European Union as it continues talks with regulators to gain clarity on Tecfidera's regulatory data protection.

"We won't know for a while if it has data exclusivity in Europe," Raymond said. "If they don't get data protection it may not be worth launching Tecfidera in the EU. That's a wild card."

He says sales in Europe represent $850 million, a big piece of the $2.8 billion in Tecfidera sales he's modeling for 2016.

Tecfidera is Biogen's third disease-modifying therapy for MS. Avonex, an injectable interferon, helps reduce the recurrence of relapse for patients with relapsing MS. In the U.S., it is also approved to slow disability progression. Tysabri is a treatment approved for relapsing forms of MS in the U.S. and relapsing-remitting MS in the EU.

Kingsley says Tysabri has an "established and powerful efficacy -- (it's) the drug to choose when more efficacy is needed." As a result, he adds, it has captured a meaningful portion of the market, particularly with patients who have aggressive forms of the disease.

In the second quarter, worldwide sales of Avonex were $774 million, and Tsyabri's were $387 million. Raymond says Avonex annual sales are $3 billion.

Pre-launch surveys raised concerns because they indicated that most of the patients who switched to Tecfidera had been taking Avonex, he says. But a post-launch survey showed that only about 20% of the patients who switched to Tecfidera had been taking Avonex and 27% had been taking Copaxone byTeva Pharmaceutical ( TEVA ).

That showed Copaxone is the drug that's the "most vulnerable," Raymond said.

Biogen's Kingsley doesn't see Tecfidera cannibalizing the company's existing MS therapies.

"Over time, Avonex and Tysabri should continue to have growth potential and perform well alongside of Tecfidera," he said. "It is not a replacement for either of these."

Meanwhile, Biogen is faring handsomely on the financial front. Overall sales in the second quarter climbed 21% to $1.72 billion, smashing views for $1.62 billion. Earnings rose 26% to $2.30 a share, sailing past estimates for $1.93.

Analysts polled by Thomson Reuters see full-year earnings climbing 31% to $8.57 a share. That would be nearly triple the 11% growth seen in 2012. They estimate earnings will rise 28% in 2014.

Biogen is fourth largest by market cap in the Medical-Biomed/Biotech industry group, afterGilead Sciences (GILD),Amgen (AMGN) andCelgene (CELG). The group is ranked a strong No. 4 of the 197 groups IBD tracks, and Biogen has a highest-possible Composite Rating of 99.

Kingsley expects the oral category of MS therapies will "grow meaningfully," and that Tecfidera will be the leader in the category.

He sees potential for Biogen to be the product leader in each segment of the market for MS therapies.

"And as a franchise of MS products, we think we can grow faster than the competition," he said.

Kingsley sees growth across Biogen's whole MS franchise.

"Tecfidera is an important piece of that," he said. "But we're in a position where we have three products that among them meet a broad range of needs with patients with relapsing-remitting MS."

It "positions us for some sustained growth," Kingsley added.

Future MS Treatments

Biogen also has a healthy pipeline. Plegridy is a potential launch in 2014. It's an MS injectable therapy, an interferon, which is in the same family as Avonex. The interferon class of treatments is often used as a first-line treatment for MS.

"If approved, we believe Plegridy could provide patients an efficacious treatment option with less frequent dosing and an innovative auto-injector, which may position it as a preferred interferon treatment option," Biogen CEO George Scangos said on the Q2 conference call.

Two other potential 2014 launches are Alprolix, a treatment for hemophilia B, and Eloctate, a treatment for hemophilia A.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas

Referenced Stocks: BIIB , NVS , RRMS , SNY , TEVA

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