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In March the FDA approved Biogen Idec's (BIIB) oral drug Tecfidera for the treatment of multiple sclerosis (MS). The launch of the drug was so successful that ISI Group analyst Mark Schoenebaum calls it the "holy mother of all launches," as it has exceeded the launch numbers of both Gilenya from Novartis (NVS) and Aubagio from Sanofi (SNY), its oral competitors.

Tecfidera was expected to run up sales quickly, and it did so much that the company had difficulty supplying some overwhelmed pharmacies.

Biogen attributes $110 million of Tecfidera's sales to patient demand and the remaining $82 million to inventory-building by wholesalers.

Tecfidera shines

Due to the hot launch, revenue estimates were increased to $240 million to $300 million for 2013, according to a Wells Fargo report. The medicine may have sales of $3.4 billion by 2017, according to the average of eight analysts' estimates compiled by Bloomberg.

The approval of Tecfidera was preceded by a breathless Wall Street hype which apparently successfully psyched the doctors too.

In a survey conducted by WorldOne Interactive, 40 percent of U.S neurologists polled said they were "warehousing" their patients in anticipation of Tecfidera. Two-thirds of physicians (out of 50 total) told WorldOne Interactive that the availability of Tecfidera would make them less likely to prescribe Aubagio, and 68 percent said the same about Gilenya.

More recently, an investor note from Leerink Swann said the drug showed a 4.3 percent week-over-week increase in new prescriptions for the week ended July 26.

...And a few bumps

Patient's death The death of a patient in July who had taken Tecfidera, was unlikely to be linked to the medicine, Biogen said.

The patient had taken Tecfidera for a little over five weeks, but discontinued using the drug due to gastrointestinal problems, such as vomiting and diarrhea. She had been off the drug for more than two weeks prior to her death, which was reported as caused by a type of pneumonia, more common to MS patients and not due to GI events.

Fumaderm, an early formulation of Tecfidera, was tied to three cases of a brain infection called PML (progressive multifocal leukoencephalopathy) more often linked to Biogen's potent medication Tysabri.

There haven't been any cases of PML in 2,600 patients treated with Tecfidera, including those who have been on the drug for four or more years, Kate Niazi-Sai, a Biogen spokeswoman said in an interview.

Fumaderm and Tecfidera are "chemical cousins," not identical copies, said Eric Schmidt, an analyst at Cowen & Co. in New York quoted in the Bloomberg article linked above. Many psoriasis patients in Germany has been getting the Tecfidera "look-a-like" drug for years, with no serious safety problems.

Competitor's patent approved Netherlands-based Synthon filed a formulation patent that would allow the company to create a generic version of Tecfidera.

The patent, WO2013076216, titled "the controlled release particles comprising dimethyl fumarate" was filed in November 2012 and accepted by the WIPO (World Intellectual Property Organisation) in May 2013.

According to Synthon's filing, the patent relates to dimethyl fumarate coated by at least one layer of a pH-dependent entero-resistant polymer. After oral administration, the particles will be released in a controlled manner into the upper gastrointestinal tract in a minimum amount.

European patent issue European launch has been delayed. Biogen disclosed in a May 8-K filing to the SEC that it has won an EU patent that extends protection for Tecfidera at a 480 mg dose until 2028, but it also seeks an unspecified "regulatory data protection" prior to launch.

Analyst Mark Schoenebaum speculates that Biogen is possibly trying to secure a "new active substance" designation for Tecfidera in order to gain additional protection against generic threats.

The analyst expects the European market to account for 40 percent of Tecfidera sales at their peak.

Supply problems There wasn't enough of the drug to go around to satisfy the pent-up demand during launch. Biogen may have to fix or increase its production.

Reimbursement delays Some insurers have been slow to approve reimbursement for Tecfidera and some patients had to wait several weeks for the go-ahead. Some payers want proof that patients have failed on other drugs before they'll foot the bill for Tecfidera.

To ease the situation, Biogen has offered Tecfidera for free to patients who have to wait longer than two weeks for reimbursement.

Price Tecfidera costs $54,900 a year wholesale, which is slightly less than Gilenya, but more than older injectable treatments, such as Biogen's own Avonex.

And gaining reimbursement for expensive drugs, even convenient oral treatments, could become tougher as generics hit the market, especially in budget-conscious Europe.

Competition

Tecfidera faces competition from other oral drugs like Sanofi's Aubagio and Novartis' Gilenya, but the drug comes with some advantages. Tecfidera came out of clinical trials with a relatively clean safety profile, compared with Aubagio, which is restricted with a black-box warning about increased risk of liver problems, and Gilenya, which regulators warn should not be used in patients with heart disease.

Tecfidera's success may affect the sales of its oral rivals.

Gilenya brought in $468 million for Novartis in the second quarter, an impressive year-over-year increase of 65 percent. But that was a bit of a slowdown for Gilenya, which shot up by 70 percent in the first quarter and 72 percent during the last quarter of 2012.

Sanofi's Aubagio, approved by the FDA last September, sold $26.5 million worth of drugs in the first quarter.

Teva's (TEVA) injectable Copaxone is one of the "grand oldies" of the business.

Sanofi undercut Teva by pricing Aubagio at $45,000 a year, 7 percent less than Copaxone, to break into the market. It appears that so far it has worked: In March, the head of MS for Genzyme (a Sanofi subsidiary) said that in Aubagio's first 6 months, it had been prescribed by 80 percent of all MS specialists, with most of those switching over from Copaxone.

Teva has a lot to lose. Copaxone 2012 sales were $4.02 billion and responsible for upward of 40 percent of the company's overall profits.

Teva will lose its patent protection in 2014 in the U.S., rather than 2015 because of a ruling from a U.S. appeals court in July. This makes it potentially prey to cheaper generics next May. Two teams are developing cheaper generic forms of Copaxone: one is Novartis subsidiary Sandoz working with Momenta Pharmaceuticals (MNTA), and another team is Mylan (MYL) with Natco Pharma Ltd.

Investors' summary

Biogen reported second quarter revenues of $1.7 billion, an increase of 21 percent compared to the second quarter of 2012. Non-GAAP diluted earnings per share for the second quarter of 2013 were $2.30, an increase of 26 percent over the second quarter of 2012. Non-GAAP net income was $549 million.

Avonex revenues increased 2 percent year-over-year to $774 million. Avonex remains one of the most prescribed treatments for relapsing forms of MS worldwide and continued to gain market share during the second quarter within the injectable segment.

Tysabri revenues have increased 38 percent year-over-year to $387 million primarily due to the acquisition of Elan's (ELN) share in Tysabri as Biogen started booking 100 percent of Tysabri revenues. Global sales of Tysabri decreased 2 percent over the second quarter of 2012.

Rituxan revenues from the joint venture with Roche (RHHBY.OB) brought in $289 million for the quarter, an increase of 1 percent compared to the second quarter of 2012.

At the end of June, Biogen had cash and cash equivalents totaling $775 million.

For 2013, revenue growth is expected to be approximately 22-23 percent. Non-GAAP diluted EPS is expected to be between $8.25 and $8.50.

The stock price for the past 52 weeks ranged from $134.00 to $242.64.

Multiple sclerosis is a big market: the disease affects 2.1 million people worldwide, according to the National Multiple Sclerosis Society. With Tecfidera's strong start in the U.S., as well as approvals in Canada and Australia, Biogen has maintained and expanded its leadership position in the treatment of multiple sclerosis.

Source: Biogen Gains A Leg Up In Fiercely Competitive MS Field