Hungry for brand sales, Teva undercuts generics with new, $60K Huntington's med Austedo

With its generics unit under pressure, struggling Teva could use some help from its specialty department. And Monday’s approval of Huntington’s med Austedo should bring just that.

The FDA approved the newcomer to treat chorea, the involuntary, random and sudden movements that occur in about 90% of Huntington’s disease patients. The orphan drug is just the second green-lighted for chorea, behind Valeant’s Xenazine (tetrabenazine), and the first-ever deuterated product to win the FDA’s favor. With that technology, Austedo's active ingredient breaks down more slowly, an edit on Xenazine that maintains efficacy at a lower dose.

That's not Teva's only competitive move, either. The company intends to undercut its rivals on price.

Austedo’s list price of $60,000 per year is less than half Xenazine's wholesale cost of $153,000, and it's far less than tetrabenazine generics, which run between $92,000 and $96,000, RBC Capital Markets analyst Randall Stanicky wrote in a Monday investor note.

Of course, Teva’s med is also taken in 24mg-per-day doses, compared with 50mg doses for its rival, so “we had expected Teva to come in at a discount to the generic,” Stanicky wrote.

Austedo's approval follows a rejection last May, which thwarted Teva’s plan to score a quick nod after paying $3.5 billion for the drug's original developer, Auspex, in 2015. Regulators asked for a closer look at “certain metabolites” found in patients, but they didn’t require new trials.

Now, finally, the focus on the med “shifts to pricing and commercial strategy,” Stanicky wrote. And the price Teva has selected not only undercuts its Huntington's chorea rivals but falls right in the competitive range for tardive dyskinesia, a disorder Austedo could next be approved to treat.

Neurocrine Biosciences, which is due for an FDA decision on its tardive dyskinesia candidate Ingrezza next week, is aiming for a similar price, Stanicky said.

RELATED: The top 10 drug launches of 2017Ingrezza

Austedo has its own decision date in TD slated for the end of August, and the chorea nod is a good sign. "We believe investors will see this approval as derisking the TD indication approval for later this year," Wells Fargo analyst David Maris wrote in a Tuesday research note.

All told, Stanicky expects to see Austedo bring in 2022 peak sales of $1.33 billion across all its indications—a figure that sits above Wall Street consensus of $700 million. Maris, for his part, sees 2017 sales of less than $100 million that'll approach the blockbuster benchmark by 2022.

Teva said its Austedo pricing was a cost-benefits and access decision. “We believe this price strikes an appropriate balance between the value Austedo can provide in terms of efficacy and safety demonstrated in clinical trials by utilizing a new technology, and the need for patients to have access to this important treatment," a company spokeswoman said in a statement. "We will offer patient assistance as well."

Meanwhile, the Austedo approval is a welcome bit of news for a company that's seen a string of negative headlines. It could represent “an important and much-needed shift in focus away from recent challenges” at the generics giant to “a part of the business that can provide some incremental P&L support,” Stanicky wrote.

Teva, which has been squeezed by industrywide pricing pressure in the generics space—as well as launch delays and some questionable M&A moves—bade farewell to CEO Erez Vigodman in February, and late last month, Israeli media reports predicted thousands of job cuts beginning in mid-April. That's not to mention the expected sales hit its portfolio-leading Copaxone franchise could take if generics descend on the company's long-acting version of the med.