Himalayan Fungus Boosts Mitsubishi Tanabe Revenue

Himalayan Fungus Boosts Mitsubishi Tanabe Revenue
Tetsuro Fujita, emeritus professor at Kyoto University, poses for a photograph in his laboratory in Kyoto, Japan. Photographer: Tetsuya Yamada/Bloomberg

Tetsuro Fujita’s eureka moment about a Himalayan fungus in 1985 may mean part of a $5 billion payout for Mitsubishi Tanabe Pharma Corp. a quarter-century later.

While the scientist drove over a bridge between Japan’s Shikoku and Honshu islands on his way to take up a research post for traditional herbal remedies, Fujita realized the fungus, used in a Chinese medicinal soup, must be suppressing the immune system of the insects on which it grew.

His research at Kyoto University not only helped yield Gilenya, a new treatment for multiple sclerosis -- the debilitating condition afflicting more than 2 million people worldwide -- it also promises to bring Mitsubishi Tanabe its biggest money earner. Annual sales of the pill, the first for the autoimmune disease, may exceed $5 billion, UBS AG said.

“Little did I think that it would be a treatment for multiple sclerosis,” Fujita, 80, said in an in interview Kyoto. “I was more interested in immune suppression for organ transplants. I knew nothing about the disease back then.”

Novartis AG, based in Basel, Switzerland, began selling Gilenya in the U.S. in October. Projected sales of the medicine would rank it among the 10 best-selling drugs worldwide, based on data from IMS Health Inc., a Norwalk, Connecticut-based research company.

Mitsubishi Tanabe will probably book royalties equivalent to 10 percent of sales, based on the median of four analyst estimates in a Bloomberg News survey.

Better Than Expected

Kazuko Hamada, a spokeswoman for Mitsubishi Tanabe, declined to comment on the royalty payments that the Osaka, Japan-based drugmaker will receive. Novartis spokesman Eric Althoff also declined to comment on the royalties.

Gilenya’s fourth-quarter sales of $13 million were above expectations, Dhavalkumar Patel, who heads Novartis’s autoimmune research, said last week.

“Novartis says 2,000 people are already using the drug in three months,” Kenji Masuzoe, an analyst at Deutsche Bank AG in Tokyo, said by telephone on Jan. 28. “That’s great progress as I’ve been expecting 10,000 people by the end of this year, which will mean sales of about $350 million.”

Multiple sclerosis causes the immune system to attack the myelin sheath, which surrounds and protects nerve cells, leading to symptoms including numbness, difficulty in coordination and memory loss, according to Medline Plus, a website of the U.S. National Institutes of Health. In its severest form, it can shorten life and, in rare cases, lead to death, according to the U.S. National Multiple Sclerosis Society’s website.

Worst Performance

Mitsubishi Tanabe rose 2.1 percent to 1,369 yen at the 3 p.m. close of Tokyo trading. The stock gained 18 percent last year, outperforming Japan’s benchmark Topix index, which fell 1 percent.

Sales at the Japanese company declined 2.4 percent in the 12 months ended March 2010, the worst performance in five years, to 404.7 billion yen ($5 billion), according to data compiled by Bloomberg.

Annual sales of Gilenya may peak at $5.3 billion in 2018, Fabian Wenner, an analyst at UBS in Zurich, said Feb. 1.

Gilenya is approved for the relapsing-remitting form of multiple sclerosis, the most common type, and competes with injected drugs on the market including Biogen Idec Inc.’s Avonex and Teva Pharmaceutical Industries Ltd.’s Copaxone.

Superior Drug

The Novartis drug cut relapses by more than half compared with Avonex, an injected therapy from U.S. drugmaker Biogen Idec Inc., according to a patient study published in the New England Journal of Medicine last year.

Gilenya gained the support of a European medical committee in January, and a European Commission decision on approval may come in about three months. It’s also being reviewed by regulators in Japan.

In the U.S., the drug is priced at $4,000 for a monthly prescription. That’s 66 percent more than the $2,414.99 for a pre-filled syringe of 30 micrograms per milliliter of Avonex, a month’s supply, according to PharmacyChecker.com. Analysts including UBS’s Wenner expect Gilenya to be cheaper in Europe.

Current medicines require patients to inject themselves every other day or once a week, Kyoko Nakata, the Tokyo-based chairman of Japan’s MS Cabin, a support group for the condition, said in an e-mail.

“They are shots, so during the course of treatment, they are a constant reminder to patients of their condition,” said Nakata, who was diagnosed with multiple sclerosis in 1993 and has been taking Bayer AG’s Betaferon since 2000. “Gilenya would make it easier to treat the disease as it saves time and brings patients closer to having a normal life.”

Larva Invader

With the help of another researcher, Fujita partnered with Yoshitomi Pharmaceutical Industries Ltd. and Taito Co., now respectively part of Mitsubishi Tanabe and Mitsui Sugar Co. The scientists began studying in 1986 the Cordyceps fungus known in Chinese and Japanese as “winter insect, summer plant,” so called because it invades insect larva during winter and grows out of the host by summer.

Fujita said he was inspired by the discovery of ciclosporin, also derived from a fungus, which spurred research into how the immune system may be subdued in transplant patients. Fujita, now a professor emeritus at Kyoto University, said he was unaware the immune-modulating properties of Cordyceps could eventually help multiple sclerosis patients.

“I knew from reading the Chinese medicinal encyclopedia that the fungus feeds off the larva, lives in a symbiotic relationship for a year, and comes out of the ground in summer by growing out of the carcass,” he said. “That made me think the fungus must be suppressing the larva’s immune response.”

Centuries-Old Remedy

Used as an herbal remedy for centuries, the fungus contains an insoluble, toxic compound called myriocin, said Kenji Chiba, who worked on the project at Yoshitomi. It took scientists at least three more years before they could modify the compound into a usable form, creating fingolimod, or Gilenya.

Novartis licensed the overseas rights to fingolimod from Mitsubishi Tanabe in 1997.

“Although it took a quarter of a century, I’m happy it’s become a drug while I’m still alive,” Fujita said. “It makes me happy that something I did is making others happy.”

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