Teva forecasts 'tenfold' growth for new launch Austedo. Why don't analysts agree?

Austedo
Teva has high hopes for its Austedo after a strong launch. But "tenfold" patient growth? Analysts aren't sure. (Teva)

Riding high on the launch of Huntingson's disease and tardive dyskinesia (TD) med Austedo, Teva is looking for "tenfold" patient growth in the drug's future, CEO Kare Schultz said.

But analysts aren't so sure Austedo can pull it off—and that could complicate an already tough outlook for the Israeli drugmaker. 

In a roundtable chat with analysts from Jefferies, Schultz touted Austedo's $105 million in third-quarter sales, saying the company is projecting a tenfold increase in TD patients over time––and a peak sales forecast of more than $2 billion, by Jefferies' estimate. 

Those analysts in a Tuesday note to investors said that forecast "would be far ahead of Street estimates." 

In a third-quarter earnings call, Schultz acknowledged that while revenue for Austedo had been "up and down" in recent quarters, a lack of competition in the field and growing patient numbers could spell big growth for the drug moving forward. 

"And we have one competitor, but between us and that one competitor, we have still only a very low level of patients receiving treatment in the US," Schultz said, according to a transcript of the call. "So we are quite convinced that this product can keep on growing for the foreseeable future."

Teva is also expecting a readout for Austedo in Tourette's syndrome in early 2020, potentially opening the drug to another patient pool. 

Meanwhile, Schultz acknowledged that another recent launch, CGRP migraine med Ajovy, has had a less than stellar rollout so far. However, Schultz still held out hope that an expected autoinjector approval in early 2020 could help the drug reach its peak forecast of around 25% of the CGRP market. 

RELATED: Teva taps new CFO, hikes legal set-aside to more than $1B as opioid deal falters

The bullish outlook for Austedo comes as Teva suffers a multibillion-dollar legal overhang from thousands of opioid lawsuits. Even more scary for investors, bankruptcy whispers are beginning to swirl.

In a report Wednesday, BiopharmaDive listed Teva as the drugmaker at the "highest risk" of bankruptcy, citing the opioid lawsuits, generic pricing pressure in the U.S. and a price-fixing lawsuit joined by 44 state attorneys general working its way through federal court. 

A Teva spokeswoman declined to comment on the report or Teva's likelihood of declaring bankruptcy. 

But Schultz was mostly positive in his chat with the Jefferies analysts, not only highlighting Austedo's growth but also claiming Teva was "close to back to normalcy" on generic pricing erosion in the U.S., with pricing "effectively going flat" from 2020 on. 

Schultz said price erosion would likely halt at around 6% to 10%. The $300 million to $400 million in sales erosion Teva's expected to suffer this year will mostly be offset by the launch of more than 40 new generic products. 

However, analysts were less impressed with Schultz's answers on the opioid litigation, saying he offered little in the way of "tangible progress" toward a proposed "global" settlement worth more than $23 billion.

The offer, which would include around $23 billion in donated buprenorphine naloxone and $250 million in cash, has notched support from only four state attorneys general, the District of Columbia and a group of local plaintiffs. It faces an uphill climb in bringing 46 other state lead prosecutors on board. 

"If the settlement does not work out, management believes Teva will be able to successfully settle the outstanding lawsuits and not be financially impaired," the analysts wrote in a note to investors Tuesday. "That seems like a tall (and very lengthy) order."

On the upside, Schultz agreed with Jefferies' estimate that Teva's actual costs in the $23 billion drug giveaway would amount to around $1.1 billion, making the settlement "manageable and favorable" for Teva's bottom line. Teva announced in a third-quarter earnings call that it had set aside more than $1 billion in the event of a major settlement. 

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