By Michael Erman and Divya Grover
Oct 4 (Reuters) – Mylan NV’s long-awaited U.S. approval for its generic version of rival Teva’s blockbuster multiple sclerosis treatment (MS) Copaxone drove the drugmaker’s shares up more than 19 percent on Wednesday morning and hurt Teva shares.
The approval late on Tuesday by the U.S. Food and Drug Administration came earlier than both companies had expected. It was issued a day after the health regulator said it would introduce a slew of measures to speed to market generic versions of complex drugs like Copaxone in an effort to address the rising cost of pharmaceuticals.
Copaxone is the leading MS therapy worldwide as well as Teva’s best selling drug. It generated more than $4 billion in revenue for the Israeli drugmaker last year.
With the company facing new competition, Teva’s U.S.-listed shares sank 14 percent to $16.11.
Teva said that Mylan was launching the drug before resolving various patent appeals, meaning Mylan may risk having to pay damages if those appeals favor Teva.
The FDA approved two different doses of Mylan’s version of the drug – 20 mg and 40 mg. But the 40 mg dosage is the important approval, as this dosage accounted for more than 85 percent of the drug’s prescriptions in the second quarter.
Analysts called the approval a big win for Mylan, which has been working to launch a version of the drug for years, and said it would help 2017 and 2018 earnings. The company had originally targeted a 2013 launch.
Wells Fargo analyst David Maris said that, optimistically, the drug could add 13 cents a share to Mylan’s quarterly earnings going forward. That assumes that Mylan is able to capture a 40 percent share of the 40 mg dosage market at a 40 percent discount to Teva’s pricing.
Mylan had lowered its 2017 and 2018 earnings forecast in August, saying that delays in getting FDA approvals for key generics like its versions of Copaxone and asthma treatment Advair would hurt its bottom line. It said then that it did not expect any major product launches – including Copaxone – until 2018.
Mylan said after the approval that it expected to start shipping the generic drug very soon, and that the FDA approval letter said the company might be eligible for 180 days exclusivity on the drug.
Novartis’ unit Sandoz and Momenta Pharmaceuticals already sell a generic version of 20 mg Copaxone, and are developing a version of the 40 mg dosage.
But Momenta’s difficulties in getting the higher-dose version approved had dampened expectations for Mylan before Tuesday.
JPMorgan analysts said the decision added up to full generic competition for Teva 9 to 12 months ahead of previous Wall Street expectations. Teva is already challenged by pressure on U.S. generics pricing, its debt levels and questions about how it will improve its earnings, they wrote.
Last month, Teva said it was looking to team up with other drugmakers to fund some of its development pipeline as it struggles with that debt and expiring patents. The drugmaker’s specialty business has been losing ground since Copaxone ran out of patents.
In August, a U.S. House of Representatives committee contacted Teva, Novartis and five other makers of multiple sclerosis drugs as part of a drug pricing investigation, saying that some of the dozen drugs used to treat the disease appeared to have lockstep price increases.
The 2017 price for the 40 mg version of Copaxone is $80,000 per year and the 20 mg version is more than $90,000 after having been launched in 1996 at just over $8,000, the committee said.
Mylan’s shares rose $6.29 to $38.82. Shares in Biogen Inc. fell about 1 percent to $314.45. Momenta shares fell 17 percent, or $3.05, to $14.45. (Reporting by Michael Erman in New York, Divya Grover in Bengaluru; Additional reporting by Caroline Humer in New York; Editing by Savio D’Souza, Patrick Graham and Frances Kerry)
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