Now that the worst-case scenario for Biogen in its Tecfidera patent battle with Mylan has come to pass, Wall Street analysts have a warning for investors: New generic competition to the multiple sclerosis drug will put extraordinary pressure on Biogen to win FDA approval of its Alzheimer’s drug aducanumab.
Yesterday a West Virginia federal court invalidated a key patent on Tecfidera, opening the door for challenger Mylan to introduce a generic version of the MS drug as early as this year—eight years earlier than low-priced competition to the $4-billion-a-year blockbuster was expected to arrive.
Biogen said in a statement emailed to Fierce Pharma that it will appeal the decision.
Nevertheless, Mylan could launch its generic “at risk,” before the appeals court rules. What’s more, there’s a separate Tecfidera patent battle playing out in Delaware, brought by more than 20 generic drugmakers, and that judge could "bring in the West Virginia judgment,” warned SVBLeerink analysts in a note to investors.
The West Virginia judgment prompted SVBLeerink to lower its 2021 revenue estimate for Biogen from $13.9 billion to $13.1 billion and its earnings per share forecast from $33.30 to $29.80. Similar downgrades from other Wall Street firms sent shares of Biogen down more than 7% in after-hours trading to $260.30.
It’s not just the generic threat that’s putting pressure on Biogen’s MS franchise, analysts say. Biogen did win FDA approval for its follow-up drug, Vumerity, late last year, but it hasn’t had much luck converting doctors to the new option. “Specifically, while docs report a high degree of familiarity with the drug, and even acknowledge its tolerability advantage, conversion has been thin, garnering just 1.3% patient share so far,” said Piper Sandler analysts in a note.
Meanwhile, Roche’s Ocrevus is rapidly stealing market share from both Tecfidera and Vumerity. Ocrevus hit blockbuster status in its first year on the market, making it one of the most successful drug launches of the last two years. Novartis is also proving to be a tough competitor with Mayzent, and now it’s gunning for even more of the MS market with ofatumumab, its once-monthly at-home injection.
Therefore, regardless of the timing of the Tecfidera generic, “the winds of competitive change in the MS market do not favor Biogen,” Piper Sandler analysts said.
Could aducanumab make up for an early loss of Tecfidera sales? That’s a long shot, too. Biogen surprised investors last fall when it declared that an earlier futility analysis came to the wrong conclusion and that it would, in fact, pursue FDA approval of the Alzheimer’s drug. Now the company is plotting a third-quarter filing to the FDA, and it’s getting a Swiss manufacturing site outfitted to manufacture the drug starting next year.
“Clearly what happens on the Alzheimer’s front will be the main driver of shares in the near term,” said J.P. Morgan analysts in a note to investors. “How that plays out is one big unknown.”
A quicker fix for Biogen would be to acquire a company with one or more near-term pipeline prospects. CEO Michel Vounatsos said during Biogen’s first-quarter earnings call that the company has the “financial flexibility and capacity to evaluate potential external business development and M&A opportunities” and that it remains “active” in that area.
But Biogen is clearly not quite as active in M&A as analysts would hope, particularly with the new patent threat to Tecfidera. Said J.P. Morgan, “we remain perplexed by the lack of meaningful business development/M&A activity from Biogen.”