Teva Posting Biggest Healthcare Drop in U.S.: Israel Overnight

Teva Pharmaceutical Industries Ltd. (TEVA), the world’s largest maker of generic drugs, is posting the biggest decline among U.S.-traded healthcare companies on concern its multiple sclerosis treatment won’t receive approval from American regulators.

Teva’s American depositary receipts fell 6.2 percent yesterday on the Nasdaq Stock Market to $43.76, the lowest level since April 2009. The shares have plunged 16 percent this year, the most among 58 U.S.-traded health care companies with a minimum market value of $10 billion, according to data compiled by Bloomberg. Shares in Israel climbed to 151.7 shekels, or the equivalent of $43.82, at the close in Tel Aviv today.

Laquinimod, the experimental multiple sclerosis pill produced by the Petach Tikva, Israel-based drugmaker didn’t reduce relapses more than placebo in a clinical trial, Teva said yesterday in a statement. The study, known as Bravo, is the second this year to show disappointing results for the medicine. The company is still “very confident” in the drug, Bill Marth, president of U.S. operations, said in a conference call with investors yesterday.

“What worries people is that management is creating an expectation that this drug is approvable but that may not be the case,” said David Amsellem, an analyst with Piper Jaffray & Co. in New York. “It becomes incredibly frustrating for investors who see this setback in this trial, and they see management downplaying those setbacks.”

E-mail messages seeking comment sent after hours to Yossi Koren, Teva’s spokesman, weren’t answered.

Bloomberg Israel-US 25 Index

Teva’s drop pushed the Bloomberg Israel-US 25 Index of the largest Israeli companies traded in New York down 3.8 percent yesterday to 94.88, the biggest decline since April 21. The measure retreated 8.5 percent year to date.

Israel’s benchmark TA-25 Index fell 1 percent in Tel Aviv today, bringing the loss for the year to 10 percent, or 8.4 percent in dollar terms, data compiled by Bloomberg show.

Laquinimod missed the key goal of the study, Teva said yesterday. By contrast, a third group of patients who got Avonex, an older injected treatment from Biogen Idec Inc., had fewer relapses than those who got a placebo.

Some patients who were given the drug showed differences visible in MRI scans from those who got a placebo, and laquinimod performed better than a dummy when a statistical adjustment was done to correct those imbalances, Teva said.

“This is not a company trying to take bad data and make it look good,” Marth told analysts on a conference call yesterday, referring to the adjustment.

Relapses

Laquinimod reduced relapses by 17.6 percent versus placebo, though the result wasn’t statistically significant, Teva executives said on the call. After accounting for the MRI differences, laquinimod showed a statistically significant 21 percent reduction in relapses. Biogen’s Avonex cut relapses by 29 percent after the adjustment and by 26 percent prior to it, executives said.

Teva needs the once-daily pill to replace sales it is expected to lose as its best-selling drug Copaxone, an injected treatment, faces competition from the first approved multiple sclerosis pill, Novartis AG’s Gilenya.

“If a trial misses its primary endpoint, it is a failure,” Corey Davis, an analyst at Jefferies Group Inc., wrote in an e-mailed report yesterday. “We are now assuming laquinimod is not an approvable drug.”

Multiple Sclerosis Incidence

Multiple sclerosis, which affects about 2.1 million people worldwide, is a chronic and incurable disease that destroys the nerves and robs patients of their ability to control their movements. Many patients have trouble staying on current therapies because they’re difficult to use or cause side effects, according to the National Multiple Sclerosis Society.

Israel, whose population of 7.7 million is similar to Switzerland’s, has 57 companies traded on the Nasdaq, the most of any country outside the U.S. after China. The country is also home to the largest number of startup companies per capita in the world.

The shekel fell 0.9 percent to 3.4630 per U.S. dollar at 5:52 p.m. in Tel Aviv. The currency has increased 8.5 percent versus the dollar over the past 12 months, the third-best performer among 10 emerging markets in Europe, Middle East and Africa tracked by Bloomberg.

Israeli technology companies raised $569 million in capital during the second quarter of 2011, the most in two years and up from $343 million in the same period last year, according to the Israel Venture Capital-KPMG Quarterly Survey released July 13.

Stock Market Upgrade

Israel’s stock market was upgraded to developed market status by MSCI Inc. in May 2010, the same month the 63-year-old country was accepted to the Organization for Economic Cooperation and Development.

Allot Communications Ltd. (ALLT) rose 8 percent to $16, the biggest gain in almost two weeks. The Tel Aviv-traded shares climbed 1.1 percent yesterday to 52.04 shekels, or the equivalent of $15.19, leaving the New York shares premium at 83 cents above the Tel Aviv shares, according to data compiled by Bloomberg. They dropped to 50.99 shekels in Tel Aviv today.

Israel’s biggest maker of high-speed networking equipment posted a second-quarter profit of $1.6 million after a loss of $7.4 million in the year-earlier period, according to a PRNewswire statement yesterday. Separately, the company said yesterday it will issue 4.5 million shares to the public while holders offer 965,000 shares.

Protalix

Orbotech Ltd. (ORBK), the Israeli maker of quality-control equipment for the electronics industry, increased 8.6 percent to $12.19 yesterday.

The company reported second-quarter adjusted earnings of 56 cents per share, beating the median estimate of two analysts of 48 cents, according to data compiled by Bloomberg.

Protalix BioTherapeutics Inc. (PLX), the Israeli biotechnology company that is developing a treatment for Gaucher disease, advanced for a third day, adding 3.1 percent to $6.64. The Tel Aviv shares increased 3.4 percent to 22.53 shekels, or the equivalent of $6.59. They were little changed at 22.54 shekels in Tel Aviv today.

The company submitted its reply to the U.S. Food and Drug Administration after the regulator’s review of the company’s application for taliglucerase alfa, which is in development for the treatment of Gaucher disease.

To contact the reporter on this story: Tal Barak Harif in New York at tbarak@bloomberg.net; Naomi Kresge in Berlin at nkresge@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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