Migraine market starts to look tough for Teva

Gali Weinreb

The enthusiasm over FDA approval for Teva's migraine treatment has waned.

The two most prominent pharma companies on the Tel Aviv Stock exchange, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) and Opko Health, were largely responsible for the declines in the Tel Aviv 35 Index in the past three sessions. Teva fell 4.5% today, making it a 10% drop in three days, and bringing the company's market cap down to NIS 85 billion. Opko Health fell 6.5% today, for a 17% drop over the three days. Its market cap is now at NIS 7.9 billion. Perrigo, the third largest pharma stock on the Tel Aviv 35 list, remained fairly flat over the same period.

The falls in Teva are attributed to two possible causes. The leading factor is apparently the recommendation by a panel of the European Medicines Agency to approve Eli Lilly's migraine treatment. Eli Lilly's drug works in a similar way to Teva's migraine drug, which was recently approved for sale and which is considered one of the two great hopes for the future of the company's innovative business, alongside its drug for Tourette syndrome.

The migraine prevention market has started to become very crowded, and the race to the top is close. The first drug in the category, from Novartis and Amgen, was approved in May, and was given a low market penetration price. Teva's product was approved for sale in the US two weeks ago, and not enough time has passed to assess the difference in the pace of market adoption of the two products. Eli Lilly's product should be considered for approval by the US Food and Drug Administration (FDA) within the next month or two, and the positive recommendation by the European panel raises the probability of it being approved in the US. A fourth product by a smaller company called Alder has passed a Phase III clinical trial but there is still no target date for a response by the FDA.

Against the background of the approval of its migraine product two weeks ago, Teva's share price rose 12% within a few days, but it has now subsided to the level it was at before the approval. This is a frequent occurrence for pharma companies that receive a drug approval that was expected: the initial enthusiasm passes, anyone who was only waiting for the event exits the stock, while those looking to the longer term start to take into account not just the glad tidings of the approval but also the challenges of the marketplace, which in this particular case are considerable.

A competitor to Copaxone?

The second factor possibly contributing to the weakness in Teva is the report by a new contender in the multiple sclerosis treatment market, TG Therapeutics, of good results in a Phase II trial for its product. The results look very promising, although the trial was carried out on just 22 patients, and it will be some time before the product reaches the market, if at all. It may be that by that time Teva's dependence on multiple sclerosis (with its flagship original drug Copaxone) will substantially reduce, but still, TG Therapeutics looks like an interesting potential competitor.

As for Opko, the company is still under the cloud of the US Securities and Exchange Commission (SEC) probe of Opko CEO Phillip Frost and of the company itself on suspicion of share price manipulation. The affair broke on September 7, and since then the company's market cap has dipped 35%. It recovered slightly on September 14 when Frost publicly rejected the accusations against him and spoke out against the SEC for not having requested his response before revealing the investigation. The correction was short-lived, however, and investors now await legal developments.

Published by Globes [online], Israel business news - www.globes-online.com - on September 27, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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