After Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) obtained the long-awaited marketing approval from the US Food and Drug Administration (FDA) for its Ajovy (formerly Fremanezumab) drug for treatment of migraines, IBI Investments today raised its target price for Teva's share from $26 to $28. Teva's share price responded in aftermarket trading on Friday by jumping 6% to $24.20 and was up 7.7% in TASE trading as of web posting.
In response to marketing approval for Teva's drug, IBI pharma and medical analyst Steven Tepper wrote today, "This is an important milestone. We believe that an increase of 10-15% in immediately response to the approval is justified."
Tepper added, "This is very positive news. Even though the market expected it, there was also concern about a further delay in approval." He mentioned that the product was entering the market with two other competitors: Amgen, which obtained marketing approval for its product a few months ago, and Eli Lilly, which expects approval soon. "The three treatments are based on a biological drug that can be injected monthly to reduce the number and force of migraine attacks by disrupting the CGRP mechanism," Tepper writes. "In our estimation, the new products have potential for 2-2.5 million patients suffering from severe migraines in the US alone and a total market of $8-10 billion."
Tepper adds that Teva has some competitive advantage because its drug can be injected once every three months instead of once a month, while its two competitors have a slight advantage of an automatic syringe that is more comfortable for self-injection. "Teva asserts that in the future, it will also have an automatic syringe. In any case, it believes that a large group of patients will prefer going to a doctor for an injection once every three months to injecting themselves once a month. Although the products are slightly different, there is no significant differentiation between them. We believe that the market will be divided among the three competitors, with a slight advantage to Amgen as the first in the market," he states.
Tepper believes that the peak sales potential for Teva's product is $1.6-2.4 billion a year, but qualifies this by writing that penetrating the market will take time and full realization of the potential will take 4-5 years to achieve. "In our estimation, the substantial need for a solution for patients suffering from severe migraines and the price, which is regarded as very reasonable for a biological drug, will facilitate fairly easy penetration of the market. The wholesale price of Ajovy is $6,900 annually, similar to the price of Amgen's competing drug," he writes.
Even though the new approval will not affect Teva's 2018 results, Tepper expects steep sales growth in the coming years, starting in 2019, and a substantial effect on profits starting in 2020. "Obtaining approval for Ajovy, Teva's new flagship product, is an important milestone in the company's history. It will be a key growth engine for the company in the medium term, at a time when, Copaxone, Teva's previous flagship product, is fading," Tepper explains.
Published by Globes [online], Israel business news - www.globes-online.com - on September 16, 2018
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