Teva’s Copaxone Successor Fails in Latest Clinical Trial

Ori Hershkovitz
“Laquinimod is dead, if not regulatorily, then commercially,” said Ori Hershkovitz , a partner at Sphera Funds Management Ltd. in Tel Aviv. Photographer: Daniel Acker/Bloomberg

Teva Pharmaceutical Industries Ltd.’s experimental multiple sclerosis pill failed to reduce relapses more than placebo in a clinical trial, dealing a blow to the company’s effort to find a successor to an older drug.

The medicine, laquinimod, missed the key goal of the study, the Petach Tikva, Israel-based drugmaker said today in a statement. 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. Teva’s American depositary receipts fell the most in more than three months.

The study reported today, known as Bravo, is the second this year to show disappointing results for the medicine. Analysts expressed skepticism on a conference call with company executives that Teva would be able to win approval from the U.S. Food and Drug Administration for laquinimod. Teva said it aims to submit the drug by early next year.

“Laquinimod is dead, if not regulatorily, then commercially,” Ori Hershkovitz, a partner at Sphera Funds Management Ltd. in Tel Aviv, said by e-mail. Sphera doesn’t have a position in Teva shares.

Teva’s American depositary receipts fell $2.88, or 6.2 percent, to $43.76 at 4 p.m. in New York, the biggest single-day drop since April 21. Active Biotech AB, which is developing laquinimod with Teva, fell the most in at least 19 years, according to Bloomberg data.

Statistical Adjustments

Some patients who were given the drug showed differences visible in MRI scans from those who got 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,” Bill Marth, president of U.S. operations for Teva, told analysts on a conference call today, referring to the adjustment.

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’s 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.

Allegro Trial

A previous late-stage trial, Allegro, showed that laquinimod worked. The drug reduced relapses by 23 percent compared with a placebo and cut disability progression by 36 percent, Teva said in April. Still, those results fell short of investors’ expectations.

The FDA requires two successful late-stage clinical trials before approving MS drugs, so a third study is likely to be necessary, Marc Goodman of UBS AG wrote in a note to investors today. The New York-based analyst, who had been predicting $100 million in 2015 sales for laquinimod, eliminated those from his estimates based on today’s results. He rates Teva’s shares “buy.” Teva executives said they’re confident they can submit laquinimod for approval based on the Allegro and Bravo trials.

Earnings Estimate

Failure for laquinimod to win approval may cost Teva $627 million in sales in 2015, reducing earnings per share by 61 cents, Ronny Gal, a New York-based analyst for Sanford C. Bernstein & Co., wrote in a note to investors today. Gal rates Teva’s shares “outperform.”

Active Biotech, based in Lund, Sweden, plunged 42.15 kronor, or 54 percent, to 36.60 kronor in Stockholm trading. Biogen gained $1.03, or 1 percent, to $102.90 at 4 p.m. New York time in Nasdaq Stock Market composite trading.

Multiple sclerosis causes the immune system to attack the insulating tissue around nerve fibers, slowly depriving patients of mobility, balance and coordination. The disease affects about 2.1 million people worldwide, many of whom have trouble sticking with injected or infused therapies because they’re difficult to use or have side effects, according to the National MS Society, a New York-based patient group.


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