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Teva Falls on Negative CHMP Opinion - Analyst Blog

By: Zacks.com
Posted: 1/27/2014 5:20:00 PM
Referenced Stocks: ACT;BIIB;CHMP;MS;RRMS

Teva Pharmaceutical Industries Limited ( TEVA ) and Active Biotech announced that their oral multiple sclerosis (MS) candidate, Nerventra, received a negative opinion from the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP). The companies are looking to get the candidate approved for the treatment of relapsing-remitting multiple sclerosis (RRMS).

The CHMP rendered a negative opinion as it believes that the potential risks associated with Nerventra outweigh the benefits based on currently available data. Data found in animal studies - a higher occurrence of cancer after long-term exposure to Nerventra - and chances of an adverse effect on the unborn baby when taken by pregnant women, led to the CHMP opinion. Teva and Active Biotech are planning to request a re-examination of the CHMP opinion. Teva's shares fell 2.45% on the news.

Our Take

We are disappointed with CHMP's opinion on Nerventra. The successful development and launch of Nerventra would help strengthen Teva's multiple sclerosis drug portfolio. Teva already has a multiple sclerosis product in its portfolio - Copaxone.

However, Copaxone could start facing generics this year. Last month, Teva provided guidance for 2014 based on two scenarios related to Copaxone - Copaxone remaining exclusive and Copaxone going generic. The entry of Copaxone generics this year could cut total revenues by about $500 million and earnings by 60 cents.

We note that several oral multiple sclerosis therapies are currently available including Novartis ' ( NVS ) Gilenya and Biogen Idec 's ( BIIB ) Tecfidera among others. Competition in the oral multiple sclerosis market is intense and Nerventra needs to demonstrate superior efficacy and safety to gain share in this market.

Teva carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks include Actavis ( ACT ) carrying a Zacks Rank #2 (Buy).



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