Merrill Lynch says that Teva Pharmaceutical Industries Ltd's (Nasdaq: TEVA; TASE: TEVA) Copaxone is still the drug of choice for the treatment of multiple sclerosis, but doctors are very open to oral drugs. Merrill Lynch commissioned a survey of 75 neurologists that treat multiple sclerosis to gauge their use of current drugs and how oral drugs could fit into the treatment landscape.
Merrill Lynch reiterated its "Buy" recommendation for Teva and target price of $58.
The survey found that these doctors believe that Copaxone remains the drug of choice for multiple sclerosis; oral drugs could gain robust share; the MS market could grow modestly; and Gilenya (the oral treatment made by Novartis AG (NYSE:NVS; LSE: NOV; SWX: NOVZ).) has not meaningfully expanded the market.
Merrill Lynch analysts Gregg Gilbert, Haim Israel, and Sumant Kulkarni say that the survey suggests that their assumptions about the erosion of Copaxone assumptions appear appropriate, that the assumption of a flat market seems conservative, and that Teva's oral laquinimod could be a large product.
The analysts caution, however, that the survey does not take the threat of generic Copaxone into account.
The survey found that doctors, on average view Copaxone as the best multiple sclerosis drug and as a favored therapy for new patients. It is also the best alternative for patients for whom other drugs failed.
The analysts assume $2.4 billion in Copaxone sales in the US in 2011 and 2012, $1.2 billion in 2013, $1 billion in 2014, and $800 million in 2015. The model assumes zero market growth in this period, and Copaxone's market share declining from 40.5% in the second half of 2011 to 37% in 2012 (mainly due to competition from Gilenya). They conservatively assume that generic competition, beginning in 2013, will cut Copaxone's market share to 17.5%.
Teva's share price fell 1.3% on Nasdaq yesterday to $46.87, giving a market cap of $44 billion, and fell 0.4% by mid-afternoon on the TASE today to NIS 162.
Published by Globes [online], Israel business news - www.globes-online.com - on June 21, 2011
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