Clal Finance Ltd. has downgraded its recommendation for Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) to "Market perform" with no target price. Analyst Yonatan Kreizman says that if Biogen Inc. (Nasdaq: BIIB) publishes positive results of its oral multiple sclerosis drug, BG-12, a potential rival of Teva's Copaxone and Laquinimod, Copaxone sales could fall by $1 billion, possibly as early as 2013.
Biogen is due to announce the results of its Confirm study of BG-12 at Europe's Ectrims 2011 conference.
Teva's share price fell 10% after Biogen published positive results of its Define trial of BG-12. Although the trial found a 53% withdrawal in attacks, the company did not provide any details about the drug's safety profile or side effects.
Wall Street analysts believe that if the Confirm results are similar to the results of the Define test, Biogen's share price will jump by up to 10%, but unfavorable results could cause a 20% plunge in the share price. The effect on Teva's share would be the reverse.
Kreizman says, "There are three possible scenarios: BG-12 has substantial efficacy; it shows similar efficacy; or less efficacy, which is the most unlikely scenario. Interestingly, the patients in Copaxone's trials in the earlier 1990s were in worse shape than today. At the time, Teva reported a 29% drop in attacks during the year, so theoretically at least there should be a greater reduction in the number of attacks."
In a separate development Kreizman believes that the US Food and Drug Administration (FDA) will not expand the indication of Azilect to treat the causes of Parkinson's disease in addition to treating its symptoms. He says, "This is a high hurdle, because the FDA has never approved any treatment for delaying the onset of neurodegenerative diseases. In view of the background material that the FDA has published ahead of its final decision, we believe that Teva's application will be rejected."
However, even if the FDA rejects Teva's application for Azilect, Kreizman believes that it will have no material effect on Teva's share as market expectations were low. An FDA acceptance of the application would be a "pleasant surprise" and boost Teva's share price by $2-3.
Azilect had $97 million in second quarter sales, 38% more than in the corresponding quarter of 2010.
Teva's share price rose 1.1% at the opening on Wall Street today to $39.57, giving a market cap of $37.2 billion, after falling 0.6% on the TASE to NIS 144.10.
Published by Globes [online], Israel business news - www.globes-online.com - on October 17, 2011
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