MS patent win boosts Novartis’ Gilenya, helps Celgene and maybe Biogen too

Novartis headquarters
A patent appeals board handed Novartis a decision that could extend its market exclusivity for Gilenya by 8 years. (Wikimedia Commons / Andrew / Flickr)

When an appeals board of the U.S. Patent and Trademark Office ruled Wednesday to uphold Novartis’ patent on multiple sclerosis drug Gilenya, it was also good news for rival Celgene. The decision pushes Novartis’ exclusivity on Gilenya from 2019 to 2027.

So how does that help Celgene? Back in February, the FDA refused to accept Celgene’s application for approval of MS candidate ozanimod, citing incomplete pharmacology information. That pushed the potential launch of the drug to 2019, giving it precious little time to get ahead of the expected flood of Gilenya generics. Sun Pharma, Teva and Apotex were among the companies challenging Novartis’ patent.

Now those generics have been delayed, giving Celgene more time to persuade physicians that ozanimod is a safer version of Gilenya. Novartis’ drug has faced safety questions for years: Gilenya carries warnings of side effects ranging from skin cancer and macular edema to progressive multifocal leukoencephalopathy (PML), a potentially fatal brain infection. But it was the first drug approved to treat MS that actually changed the progression of the disease for the better—a major selling point that turned it into a $3.2 billion-a-year blockbuster.

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Now some analysts are revising their Gilenya estimates upwards. Half of the product’s sales, $1.7 billion, were generated in the U.S. last year—a number that ODDO BHF analyst Pierre Corby had previously predicted would drop to $1.2 billion next year before plummeting to $200 million in 2020. The patent decision changes everything, he told investors in a note. “We will thus up our estimates for Gilenya US very soon,” he wrote.

Brian Abrahams, an analyst for RBC Capital Markets, is more focused on how the patent decision helps Celgene. After the FDA’s delayed decision on ozanimod, he told investors in a note, “we had concerns that the proximity of a generic Gilenya launch could hamper uptake, and substantially reduced our peak revenue estimates in MS to $900M.” The temporary block on Gilenya generics adds at least $200 million to Celgene’s potential ozanimod haul, assuming the company uses the time wisely to educate physicians about the drug’s cardiovascular safety advantages, he said.

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Celgene could certainly use that lift. Last year, the company pulled out of a phase 3 trial of a drug it had invested more than $700 million to acquire and subsequently pushed its 2020 sales guidance down by $1 billion. The company had picked up ozanimod in a $7.2 billion acquisition of Receptos, making the FDA delay on the MS drug all that much more painful. Celgene has been reshuffling its management team in recent weeks as it tries to get back on track.

Biogen could also benefit from Novartis’ patent win. The entry of Gilenya generics would have put pricing pressure on Biogen’s MS franchise, particularly its oral drug Tecfidera, Abrahams said in his note. But recent feedback from doctors upped Abraham’s confidence in Biogen’s ability to hold onto patients, and now the generic Gilenya delay adds “incrementally better Tecfidera sustainability,” he said.

Granted, generic competition is still a risk to any company developing a new MS drug. There are other Gilenya patent challenges that pose a risk to Novartis, Celgene and Biogen, Abrahams pointed out. Still, this week’s patent decision is good news all around, because “even in a worst case,” he wrote, “a generic Gilenya will likely be unable to launch until the resolution of these cases in the early-2020s.”