Teva's early Copaxone-switching success turns analysts into believers

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Early progress doesn't always equal long-term success. But at least in the case of Teva Pharmaceutical Industries--which is firing on all cylinders to convert patients to a new, long-acting version of Copaxone--early results have some analysts thinking the Israeli company may deliver on its promise to switch 30% to 50% of patients.

As Bloomberg reports, Teva ($TEVA) converted 8.7% of total 20mg prescriptions of the multiple sclerosis drug to the 40mg version for the week ended Feb. 28. And as Leerink Partners analyst Jason Gerberry reported in an investor note, IMS prescription data showed a 61% increase in total prescriptions for the thrice-weekly version for that week.

"It does appear that we and the street may have failed to understand just how comprehensive" Teva's patient outreach system has been, Cowen & Co analyst Ken Cacciatore said in a report seen by Bloomberg. "Given the initial clinician and management feedback, it now appears that these targets will prove accurate."

That outreach system includes emailing patients registered with its 24-hour patient-support hotline, and as of last week, Teva had reached 85,000 Copaxone users. According to Cacciatore, reaching--and converting--those patients ahead of the drug's patent expiration in May is key if Teva wants to avoid insurers forcing those customers to switch back to the daily shots when cheaper generics are available.

So Teva's hardly in the clear. And as Gerberry pointed out, weekly data can be wildly variable, and so it's not always a reliable indicator of near- or long-term trends. Still, he says, current trends look encouraging for Teva's new brand. In a survey conducted by Leerink, half the respondents cited the convenience of the new version or the skepticism surrounding generic bioequivalence as factors that motivated them to make the switch; as such, he sees the long-acting Copaxone capturing a 40% patient share in two years.

And just what might Teva do with the extra cash from the Copaxone market share it keeps? CFO Eyal Desheh has said the company is ready to make some deals, especially now that its debt level is "reasonable." The boost from the switchover "should provide additional dry powder for management to get aggressive on the M&A front while honoring the dividend," Gerberry wrote in a note last week.

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