Thanks to a European regulatory verdict, the golden age of oral multiple sclerosis medications might be short-lived in the region. The European Medicines Agency's vote in support of Aubagio came with a surprise judgement that the Sanofi (NYSE:SNY) pill does not merit a new active substance designation, a decision that could see it subject to generic competition as soon as 2016.
This will come as little comfort to Biogen Idec (NASDAQ:BIIB) or Novartis (NYSE:NVS), whose respective MS pills are forecast to earn about two out of every five dollars of sales from non-US markets. With European governments less lavish by default and no end of austerity in sight, generic forms of Aubagio have the potential to become the first choice for doctors who want a cheap oral alternative.
One of the advantages of Aubagio was its similarity to the rheumatoid arthritis drug leflunomide, marketed as Arava. It was a better tolerated active metabolite, and its risks of liver toxicity were well-known in advance, although they earned it a black box warning on its US label (Aubagio MS approval little to write home about, September 13, 2012). Aubagio's US market exclusivity extends to 2019.
That advantage turned into a drawback when it came to European approval. Analysts from Bernstein Research wrote that the European Medicines Agency came to its decision based on the ease with which leflunomide hydrolyses to teriflunomide when entering the body, suggesting that manufacturers of generic leflunomide can make copycat Aubagio.
Without the legal designation as a new active substance, Aubagio will not be accorded the usual 10 years of data exclusivity - three years might be all that would be necessary to conduct clinical trials and review an application for generic approval, according to Bernstein.
The Aubagio opportunity has been seen as limited for some time, especially as Biogen's Tecfidera has managed to upstage it at just about every turn - even achieving European regulators' support at the same meeting of the EMA's human medicines panel.
Still, it has been forecast to hit peak sales of $621m in 2017 - a useful amount. The Bernstein analysts characterise the October US launch as "progressing rather well", with Sanofi reporting €7m ($9m) of sales in the fourth quarter. With 41% of forecast sales expected to come from outside the US, there must be some doubt over whether those modest milestones can be achieved.
More important, a generic oral drug is likely to put a dent in the growth hopes for Novartis's quietly expanding Gilenya and Biogen's blockbuster-in-waiting Tecfidera. Separate European forecasts exist for neither compound, but Tecfidera is forecast to earn 35% of its sales outside the US and Gilenya 41%.
Aubagio has matched up poorly against Tecfidera, with weaker efficacy and worries about birth defects, and indeed has even had Bernstein speculating that its more convenient oral administration might not be sufficient to win converts from injected drugs like the interferons and Copaxone (ECTRIMS - New agents set to transform MS field, October 24, 2011).
The main question is Sanofi's strategy with the clock running down unexpectedly quickly. Other than to appeal against the decision, the French group may want to squeeze as much sales out of this asset as it possibly can. As Aubagio has not been as impressive as Tecfidera in the clinic, this will be a difficult balancing act in the context of negotiating national pricing schemes and tight government budgets.