With clock ticking on Teva migraine drug, analyst expresses doubt for approval

Teva executives continue to express confidence the drugmaker's novel migraine drug will get an FDA nod next week, but with questions lingering about the Celltrion manufacturing plant that will produce it, at least one analyst is writing it off for now.

Teva CEO Kåre Schultz in a meeting earlier this month with analysts at EvercoreISI indicated it was "more likely than not" that fremanezumab, which has already been pushed back three months, would get approved on its Sept.16 PDUFA date, analyst Umer Raffat wrote in a note. But Schultz and other Teva execs acknowledged “it could be approved or not,” Raffat wrote.

Today, with the date a week off, Credit Suisse analyst Vamil Divan is less confident of Celltrion’s ability to get everything wrapped up at the plant than he was when a July reinspection resulted in a Form 483 with eight observations. He told his clients today that it appears issues raised by the FDA about the Celltrion biologics plant are unresolved.

RELATED: Teva confident in September approval for migraine drug despite latest Celltrion plant citation

He said Credit Suisse is downgrading its shares to neutral on “what we see as … an unattractive risk/reward ahead of the Sept. 16 FDA Action Date for key pipeline product fremanezumab.” Instead of a fourth-quarter launch of the drug by Teva, Divan is expecting an approval and launch in the the second half of 2019.

“Teva continues to believe fremanezumab will be approved in mid-Sept and expect to launch the product immediately thereafter. However, with the FDA observations made recently at Teva's partner Celltrion's manufacturing site still not resolved, we believe an approval within the next 10 days is increasingly unlikely,” Divan wrote to clients Friday. “In addition, we believe expectations on fremanezumab's commercial potential may be too high given market dynamics in the CGRP space and possibly more attractive offerings from companies such as Amgen/Novartis.”

The FDA reinspected the Celltrion plant in South Korea in July as a follow-up to a warning letter issued earlier in the year. The letter was not directed at the portion of the plant producing the API of Teva’s drug candidate. However, the July visit also served as a preapproval inspection for Teva’s promising migraine drug. It resulted in an FDA Form 483 (PDF) with eight observations.

Celltrion said the citation contained eight "manageable and correctable inspection observations" and that it expects outstanding observations to be lifted soon.

If it is not approved, it will be a disappointing stumble for Schultz, who has received high marks from analysts, particularly for his engineering of a massive restructuring that is slated to cut 14,000 jobs and save $3 billion annually for the Israel-based drug company. The company has said it expects the med “could drive meaningful upside to EBITDA and cash flow for speedier debt repayment”—particularly if it launches this fall.