Teva's Copaxone Continues To Widen MS Market Lead In U.S.

The multiple sclerosis market underwent a shake-out in 2008 when Teva's Copaxone managed to pull ahead of more established beta interferon therapies, including Biogen Idec's Avonex ; the drug now holds 38 percent of the nearly $4.5 billion U.S. market.

But revenues of Teva's cash cow are not expected to slow despite signs that sales of multiple sclerosis medicines are flagging. The drug giant, better known for its generic offerings, is turning to the tried-and-true tactic of price hikes to generate additional dollars, as are other MS manufacturers. Indeed, though Copaxone (glatiramer acetate) has continued to remain the most prescribed MS drug, if its sales start to slow, this could spell trouble for Teva, given that the branded medicine fuels much of the Israeli drug maker's growth. In 2008, Copaxone generated total sales of $2.3 billion, up 32 percent from the year before.

Teva's executives cited other reasons when explaining the medicine's price increase, however. "We have the number one therapy both globally and of course in North America, so we don't think it is appropriate that we be the lowest-priced product, so we'll continue to follow where the market goes." Teva North America chief executive William Marth told investors on a July 27 earnings call.

Teva would not say exactly how much the drug's price has increased each year, but currently the average copay is $26 per month and more than half of patients pay nothing at all.

In the second quarter, Copaxone grew 21 percent year-over-year, bringing in $682 million in global sales, execs told investors. In the U.S., sales increased by 32 percent to $438 million over the same quarter last year. Outside the U.S., where Sanofi-Aventis has rights to the drug, sales grew by 5 percent.

"We expect Copaxone to continue to outpace the market growth and perform extremely well," Marth said, attributing the drug's ongoing popularity largely to its tolerable safety profile and efficacy findings.

Overall, the U.S. market for MS is up about 3.7 percent, and there are an estimated 400,000 to 500,000 people with MS in the U.S., about 100,000 who are untreated, Marth said in an interview.

But the MS population is not growing rapidly, according to Decision Resources analyst Nitasha Manchanda. "There are a finite number of patients and that intrinsically limits the market ... historically the market has been driven by price increases," rather than prescriptions, she said. Indeed, other MS therapy price jumps ranged from 7 percent to 20 percent year-over-year for 2007 versus 2008 in the U.S., she estimates.

Currently, Teva has about 200 sales reps in the field reaching out to neurologists and physicians who specialize in MS. "Of those physicians, we know who has the largest practices in MS and we tend to target them," Marth said.

Safety First, But Now Efficacy Too

Copaxone, approved in 1996, was not a front-runner right out of the gate, though it was hailed for its safety. At first, physicians believed it was less potent than approved beta-interferons on the market, including Merck Sorono's Rebif , Biogen Idec's Avonex and Berlex's Betaseron . Copaxone, a non-interferon, is a subcutaneous injection indicated for the reduction of frequency of relapses in patients with relapsing-remitting MS.

More than 10 years later, Merck Serono ran a pivotal study called REGARD, in the hopes of showing Rebif as superior to Copaxone, But the trial did not meet its clinical endpoint and, in 2007, REGARD became a win for Teva, offering data that showed Copaxone was as efficacious as Merck's medicine.The same year, Bayer ran its BEYOND study comparing the efficacy of its higher dose Betaseron to the standard doses of the drug, as well as to Copaxone. Similarly, higher doses of Bayer's Betaseron did not show a statistically significant benefit over Copaxone, further benefiting Teva.

"These findings shifted doctors' perceptions of Copaxone," Manchanda said. Copaxone used to be considered more of a second-line option to the interferons, given its perceived lower efficacy, but the efficacy data sparked uptake in the drug's use as a first-line therapy, Manchanda continued.

Interferons, however, tend to elicit flu-like symptoms after each injection, and because MS patients tend to stay on therapy for a long time, a drug's safety and side effect profile plays a large role in use, physicians said.

"I think to some extent Copaxone is so widely used because it has a better side effect profile than the interferons, and it's easier to manage" said John Ratchford, a neurologist at Johns Hopkins Hospital. He noted that unlike the interferons, Copaxone also does not require blood test monitoring.

The biggest downside for Copaxone seems to be its daily injections, Ratchford said. "In some cases, people trying to minimize the total number of injections will lean away from Copaxone," he said, noting that the interferons require injections only once weekly or monthly compared to Copaxone's 20mg/day.

Because MS is a highly variable disease, physicians like to have "an arsenal of weapons" to treat it, said Patricia O'Looney, vice president of biomedical research at the National MS Society. "This is not a one drug fits all disease. Copaxone is the leader in the market today, but one should not read too much into that because of the great variability in drug use through the disease course," O'Looney cautioned.

Biogen Idec's Tysabri (natalizumab) is the most potent of the approved MS therapies, though it carries significant safety risks - mainly an association with a very rare but sometimes fatal brain infection, progressive multifocal leukoencephalopathy (PML). Still, Tysabri is a big seller for Biogen and Elan, which are currently fighting over the future rights to the drug (¹ (Also see "A Safety Net That May Not Be So Safe: Elan Sues Biogen Over J&J Deal" - Pink Sheet, 6 Aug, 2009.)).

Teva does not see Tysabri as a competitive threat to Copaxone because the Biogen/Elan drug tends to be used in patients who have already failed on first-line treatments. But Cowen analysts pointed out in a March report that of the patients switching to Tysabri, more were coming from Copaxone than any other therapy. Though analysts did not explain what is prompting these switches, a possible reason is that Tysabri is typically used in patients with later stages of MS and so a switch could be linked to disease progression. Despite this, the analysts note that Tysabri's PML signal will likely limit competitive pressures for Copaxone.

A Tough Drug To Replicate

Copaxone's patents aren't set to expire until 2014 according to Marth, but interest from generic manufacturers such as Momenta and Mylan is already fierce.

Momenta and Teva are currently embroiled in ongoing patent litigation that's likely to continue until at least 2011. Marth believes the likelihood of a generic version gaining approval is remote, however, since Copaxone's formulation - a complicated mixture of polypeptides -is difficult to replicate.

"Our belief is that Momenta will not get approval as a generic," Marth said. "When you look at Copaxone, it is made of thousands of fragments of polypeptides that are different from vial to vial, and batch to batch."

Cowen analysts agree with Marth's assessment, viewing the four formulation patents listed in FDA's Orange Book as a high barrier to entry. Additionally, Teva is the sole supplier of Copaxone raw material, which means a generic manufacturer would need to source its own materials, and that could prove difficult.

And there's another twist. "Given Copaxone's complex drug substance, it could be treated more like a biologic, and fall under the purview of the anticipated generic biologic legislation that is likely to pass in 2009," the analysts also point out in their report.

The new legislation pending on Capitol Hill could demand that drug makers conduct clinical trials to prevent substitution for biosimilars. This, in turn, could delay Copaxone generics, potentially by more than five years.

Orals Expected In 2010

Perhaps more dangerous to Copaxone's market-leading position is the advent of oral MS drugs currently under development. Merck Serono's cladribine, expected to be approved next year in the U.S., leads the race though there are several other candidates in development.

"The competitive marketplace will look very different three to four years from now," Manchanda said. "Interferons will not have the patient population they do at the moment, so I don't think they'll be able to sustain price increases going forward."

Because orals tend to have a worse side effect profile, they won't be competing with injectable therapies in the first-line setting, she and analysts noted. "Initial studies seem to indicate orals are as effective but perhaps may be more toxic then some of our currently approved treatments," Manchanda said.

In June, Teva announced that it completed patient enrollment in the second Phase III clinical trial to evaluate its own oral MS treatment: a novel, once-daily immunomodulator called laquinimod.

- Carlene Olsen ( ² [email protected] )