Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) has submitted a document to the US Food and Drug Administration (FDA) explaining the differences between its original multiple sclerosis treatment Copaxone and the generic product being marketed by Momenta and Sandoz. The document is designed to delay the entry of a 40 mg generic version of Copaxone into the market. Poalim IBI Underwriting and Investments Ltd. (TASE:PIU) analyst Steven Tepper, who scientifically analyzed the document two weeks ago, believes that it is likely to undermine the confidence of FDA officials, leading to a substantial delay in approval of the Momenta's generic drug for 40mg Copaxone.
In order to enter the market, the generic version of Copaxone requires both FDA approval and legal confirmation that it does not violate Teva's patent. Teva is currently in a court case concerning the patents that protect Copaxone against generic competition (for the 40mg version; 20mg generic Copaxone is already on the market). Most of the analysts covering Teva, especially the international analysts, believe that Teva will lose the case, and that the generic product will be allowed to enter the market in 2017. Teva's forecasts, on the other hand, indicate the company's belief that the generic product will enter the market in 2018 at the earliest.
Up until now, most analysts have predicted that the 40mg generic product would easily obtain FDA approval, because the active ingredient is the same as in 20mg Copaxone, for which the generic product has already been approved. After finding and scientifically analyzing the document that Teva submitted to the FDA, however, Tepper concluded that it is likely to disturb the FDA's confidence, leading to a significant delay in approval of Momenta's 40mg Copaxone until mid-2018 even if Teva loses its court case.
Tepper notes that before Momenta and Sandoz's generic 20mg Copaxone reached the market, Teva had no opportunity to make the comparison it has now made. Now that that product is on the market, however, Teva has been able to compare the active ingredients for the purpose of showing that Momenta and Sandoz's product is distinguishable from the original Copaxone.
Tepper wrote, "Teva is in effect telling the FDA, 'Copaxone is a complex ingredient, not an ordinary chemical drug. The FDA has expertise in drugs, but we are experts in this ingredient called Copaxone.' In the document, they show the chemical and biological differences between the two drugs, and also the differences between the two versions of Momenta's drug." He added, "If differences were discovered even between the two formulations of Momenta, which used its best technology in creating a product as close as possible to Copaxone, it is likely that even if there is a generic version of Copaxone, not many competitors will succeed in entering the market, and the market will not become especially competitive." Tepper is now recommending "Buy" for the Teva share, writing, "Teva is currently trading at a very low multiple of 7 for its 2017 profit forecast, which is not recommended for several reasons." One is the possibility of a delay in FDA approval of 40 mg generic Copaxone. Another is that Teva is capable of merging Actavis into itself in a way that will justify the price it paid for that company. A third is belief that the looming drug pricing reform in the US will strengthen generic companies, not weaken them.
The Teva share has lost 60% of its value since its mid-2015 peak, when the company announced its intention to acquire Actavis. The company's current market cap is $38.7 billion.
In response, Teva said, "Teva gave the FDA an opinion on Glatiramer acetate in order to assist the FDA in formulating its stance, and in order to verify that it is based on the most up-to-date and precise information.
"Teva is concerned that the recommendations and tests described by the FDA are inadequate to determine an identity between the proposed generic product and Glatiramer acetate and Copaxone. Teva's position is supported by a variety of tests carried out on samples of Glatopa purchased in the market.
"According to the data, measurable differences were detected between the active ingredient of this drug and Copaxone with respect to a range of the product's characteristics that are not recorded in the tests currently conducted as part of the procedure for recommending approval of a generic drug. These figures indicate that this difference is liable to affect the way that the active ingredient encounters the patient's immune system. This is particularly relevant to the safety and effectiveness of an immunogenic treatment like Copaxone.
"Since exposure to Glatopa in the market has been relatively limited, its long-term biological and psycho-chemical effects on human beings will not become evident for years. Nevertheless, the potential negative clinical effects during this period are alarming.
"In pursuance of Teva's commitment to multiple sclerosis patients and the scientific community, the company is continuing to generate extensive scientific data concerning the complexity of Glatiramer acetate, and to compare it with the alleged generic products for Copaxone.
"Teva looks forward to a continuation of its dialogue with the FDA when it is examining the new scientific data submitted by Teva."
Published by Globes [online], Israel business news - www.globes-online.com - on October 30, 2016
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