Teva tumbles on rival's favorable drug results

CEO and "investor group" buying out Reshet 13

Teva's share price plunged after Biogen reported data from its oral multiple sclerosis drug, BG-12, a rival to Teva's Laquinimod.

The share price of Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) tumbled 10% to $44.25 in premarket trading on the Nasdaq today after rival Biogen Idec Inc (Nasdaq: BIIB) reported positive data from its Phase III clinical trial of its oral multiple sclerosis drug, BG-12, and shares jumped 21 percent in premarket trading on Thursday. BG-12 is a rival to Teva's Laqunimod.

Biogen Idec's soared 26.5% in premarket trading to $109.50, giving cap of $20 billion.

The last time that Teva's share traded at $45 was in May 2009, during the rally that began in March 2009 following the global financial crisis.

In the conference call following the financial report for the first quarter, Biogen executives said that BG-12 cut the proportion of patients who relapsed by 49% and reduced the rate of progression by 38T percent after two years compared with placebo.

Clal Finance analyst Jonathan Kreizman told "Globes", "For a long time, Teva has been building market expectations that Laquinimod will be a dominant drug in its field. Today's information shows that it has a worthy rival in addition to Gilenya, developed by Novartis AG (NYSE:NVS; LSE: NOV; SWX: NOVZ).

Biogen sells two drugs that compete against Teva's Copaxone: Avonex and Tysabri (jointly owned by Ireland's Elan Corporation plc’s (NYSE: ELN; ISE: DRX). Biogen's BG-12 will complete against Laquinimod, which is due to reach market in 2012.

Copaxone had over $3 billion in sales in 2010, accounting for a third of Teva's profits. The map of multiple sclerosis treatments is changing as oral drugs come on the market and Copaxone will likely lose its high standing.

At the 63rd American Academy of Neurology (AAN) conference in Honolulu earlier this month, Biogen presented positive data about BG-12, as did Teva about Laquinimod. Today, Biogen CEO Dr. George Scangos was optimistic about BG-12, mentioning the positive results in the clinical trial.

It seems that investors considered Scangos' optimism as reason to be worried about Teva. Bernstein Research analyst Roni Gal said that the good results of BG-12 puts it in a good position against Laquinimod and other oral multiple sclerosis drugs. He said that BG-12 results were close to those achieved by Novartis's Gilenya, which is already on the market. However, he is cautious about the lack of safety profiles for the drug, and he believes Laquinimod will find its place in the market.