Novartis AG's (NVS) novel multiple sclerosis pill Gilenia holds
the potential to shake up the $10 billion multiple sclerosis market
and give the Swiss pharmaceuticals giant a cutting edge over rivals
such as Irish drug maker Elan Corp. PLC (ELN), U.S.-based Biogen
Idec Inc. (BIIB) and Germany's Merck KGaA (MRK.XE).
The once-daily pill that promises to improve the lives of
thousands of patients who suffer from the disease that debilitates
the central nervous system has good chances to become the gold
standard after a U.S. regulatory panel earlier this month
recommended the drug for approval.
Despite raising safety concerns, the U.S. Food and Drug
Administration's panel, in an unanimous vote, found the drug to be
so effective as to allow it to become a first-line multiple
sclerosis treatment despite side effects such as lung, heart and
eye problems.
This, analysts say, raises the likelihood the FDA in September
will fully back Gilenia's marketing launch that could come as early
as in the third quarter of 2010 and net more than $1 billion in
sales for Novartis.
The FDA panel's decision was a positive surprise and will act as
a confidence booster for the Swiss pharma giant, which with the
help of Gilenia may curb the sales drop it faces when its two top
medicines--heart drug Diovan and cancer medicine Gleevec--lose
patent protection over the next few years.
Analysts have hitherto been skeptical that Gilenia will make a
deep impact, as early-stage trials raised the specter that the
drug's side-effects could negate its benefits, limiting the sales
and profit potential for the drug or even annihilating its chances
to win approval.
But after the U.S. drug panel's verdict, the market's view is
slowly changing and analysts have started to upgrade their
forecasts that range between $1 billion to $3.5 billion.
"The strong endorsement [from the FDA panel] sets the stage for
Novartis to shake up the multiple sclerosis market which is
projected to grow to $15 billion by 2015," said Karl-Heinz Koch of
brokerage Helvea. "We believe there is significant upside to our
above consensus $1.4 billion sales forecast."
Analysts also welcomed Gilenia's potential to become a
first-line treatment, thus hurting existing players, who are set to
lose massive market share.
"The Gilenia recommendation for approval was expected, but the
first line status wasn't", said Ian Hunter of Goodbody
Stockbrokers. "The implication is that it is a greater setback for
drugs already on the market." According to his estimates, Elan, for
example, could lose some 10% of its patient base.
Other market leaders could suffer too as think tank Datamonitor
expects Gilenia to become the leading multiple sclerosis therapy by
2016 and could net sales of more than $1 billion.
To date, the market for multiple sclerosis, which affects about
2.5 million people worldwide, is led by firms such as Biogen, Merck
Serono, Bayer AG (BAYN.XE), Elan and Teva Pharmaceutical Industries
Ltd (TEVA.TV).
Teva and Sanofi-Aventis SA's (SAN.FR) own the market's
best-selling drug Copaxone, which had more than $2.8 billion in
sales in 2009. Biogen's Avonex also had more than $2 billion in
annual revenue, while Bayer's Betaseron and Merck's Rebif had more
than $1 billion in sales.
Most of these drugs, however, go with side-effects that could
prove crippling for them once Gilenia is on the market. While many
existing drugs need to be administered through a daily injection or
infusion, the medicines also cause flu-like symptoms, a condition
many patients dislike although it isn't dangerous.
Gilenia's pill form is believed to appeal to both patients and
doctors because it's easier to administer and analysts say the lack
of flu-like symptoms could even help Novartis expand the market, as
many early-stage patients avoid taking some of the existing drugs
because of the hampering side-effects.
"I believe the drug will be approved and will become a success
because it is administered orally and is very efficacious," said
Andrew Weiss, pharma analyst at Bank Vontobel. Still, he warns that
Gilenia's dose related side-effects could prove a stumbling block
and even delay the drugs approval. Weiss puts the approval
probability at 50%, while he sees non-probabiltiy adjusted peak
sales at about $2.9 billion.
Concerns about the drug's side effects have diminished after the
FDA's panel decision, they but haven't fully abated--partly because
the FDA asked Novartis to provide more research data and to
consider lowering the drug's dosage to reduce side effects.
Fears that the drug could falter in late stage or even after
approval are fueled by the fact that late-stage setbacks for
multiple sclerosis drugs medicines are common.
For example, one year after the launch of multiple sclerosis
drug Tysabri, Biogen and Elan had to pull off the drug from the
market due to serious side effects such as brain tumors. The drug
was later reintroduced but has since failed to live up to the high
hopes of its producers. Also, Merck's oral multiple-sclerosis drug
needed be resubmitted after the FDA rejected approval, saying
Merck's filing was incomplete.
For brokerage Bernstein, these recent drug setbacks could serve
to postpone Gilenia's market introduction. Also, the brokerage
expects that Novartis' post-marketing efforts to highlight the
drug's side effects will be strenuous. Nevertheless, the drug holds
blockbuster potential and the brokerage sees sales of more than $1
billion by 2015.
-By Goran Mijuk, Dow Jones Newswires, +41 43 443 80 47;
goran.mijuk@dowjones.com