A new treatment for multiple sclerosis (MS) recently received a thumbs down from the FDA, citing the need for additional testing. The trials reviewed for MS drug Lemtrada (alemtuzumab) need to provide "adequate and well-controlled" data showing that the drug's benefits outweigh its risks.
Before approval is given, the federal watchdog is asking for new data from one or more active comparator trials with a new design and different mode of execution. Active comparator trails are studies that contain a group where active drugs are being administered to study patients.
Lemtrada works by targeting specific immune cell proteins and reducing their inflammatory response in patients with MS who have relapsed. As inflammation is diminished, the immune system is rebalanced, which lessens the activity of MS disease. One of the advantages of the drug is that, due to its action, it is administered infrequently – an initial 5-day course of infusion treatments is followed by a 3-day course given a year later.
FDA decision will be appealed
Genzyme, a fully owned subsidiary of Sanofi (NYSE:SNY) and the manufacturer of the drug, said that it understood that the FDA's decision to reject Lemtrada was based on the design of the completed Phase 3 trials it reviewed. The decision against approval was based on two studies, CARE-MS I and CARE-MS II, which compared Lemtrada's effectiveness in reducing relapses to beta interferon (the standard drug used by relapsed MS patients.)
Lemtrada's effectiveness in reducing relapses was superior to interferon, but FDA panel members found that the drug's ability to slow the progression of MS was unproven . Genzyme plans to appeal the FDA's decision, since Lemtrada has already been approved in Europe, Canada, and Australia.
Genzyme's strong growth in 2013
Genzyme is a profitable division within Sanofi. In fiscal 2013's third quarter, sales grew 21% and the segment, out of seven others, had the quarter's second highest growth rate. For the nine months ended Oct. 30, 2013, Genzyme's sales grew 24%. In addition to Lemtrada, the company has an oral med for MS called Aubagio , which contributed 8% to Genzyme's total third quarter sales.
Sanofi's third quarter net sales decreased 6.7% and cost of sales rose 2.3% compared to the fiscal 2012's third quarter. During the current third quarter, the company experienced a shortage and lower sales of vaccines and also had lower sales of key generic drugs. The company also had to deal with foreign exchange headwinds. For the full year, Sanofi expects fiscal 2013 EPS to be about 10% lower than the previous year, but there's a general expectation of a return to growth in the fourth quarter .
Standard therapy is still an important option for some
A treatment that's been around for some time to treat the relapse of MS and slow its progression is beta interferon. Biogen Idec (NASDAQ:BIIB) manufactures Avonex, a beta interferon injectable drug taken once a week that has been prescribed to more than 135,000 patients . The drug gained global market share during the first nine months of 2013, and on a global basis continues to be a first-line treatment for MS despite its adverse effects.
Revenues for Avonex in the past five quarters have been stable, and the third quarter's total of $733 million made up 40% of total third quarter revenues of $1.82 billion. By the end of 2013, Biogen expects revenues to rise between 23% and 25% and EPS to range between $7.50 and $7.70. R&D expenses are expected to rise 21% to 23% and will include $60 million set aside for new projects .
Oral therapies are also popular MS treatments
Gilenya is the first oral drug used for MS and offers another treatment option besides beta interferon. The drug is manufactured by Novartis (NYSE:NVS) and is part of the company's pharmaceutical growth products, whose group sales grew 28% in fiscal 2013's third quarter. The drug's annualized sales surpassed $2 billion in the third quarter; Gilenya continues to grow its market share and is now available all over Europe.
The oral MS drug had the third highest growth rate year-over-year within Novartis' pharmaceutical growth products, increasing 63% and had third quarter sales of $518 million. The company's total pharmaceutical net sales for the quarter were $7.89 billion. Novartis' full year 2013 overall net sales and pharmaceutical division sales are expected to grow in the single digits .
My Foolish conclusion
While Lemtrada's safety is still in question here in the U.S., other Western nations have already approved the drug for patient use. In addition to Genzyme, the National Multiple Sclerosis Society was also disappointed by the FDA's decision, due to the drug's significant reduction in relapses, which means improved quality of life for patients that tolerate the drug . It will be interesting to see how the appeal of the FDA's decision turns out for Genzyme and whether the company moves forward with additional testing of the drug.
The Motley Fool's Top Stock Pick for 2014
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!
Eileen Rojas has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.