Can Receptos' New Drug Beat Biogen?

Receptos shares are surging on positive midstage trial results for a multiple sclerosis treatment. Could Receptos challenge Teva and Biogen Idec in the indication one day?

Jun 10, 2014 at 2:30PM

Receptos (NASDAQ:RCPT) shares surged by a 36% this morning following news that the company's RPC1063 met its primary endpoint as a treatment for relapsing multiple sclerosis.

The midstage trial results offer investors hope that Receptos' product will eventually make its way to market and challenge market share leaders Biogen Idec (NASDAQ:BIIB). and Teva Pharmaceutical (NYSE:TEVA)

RCPT Chart

RCPT data by YCharts.

First, a bit of background
In multiple sclerosis, the protective shield surrounding nerves is damaged by the body's immune system. That damage results in a miscommunication in the body's central nervous system, leading to slate of potentially debilitating symptoms including muscle weakness, loss of balance, and tremors. 

It's estimated that more than 2 million people globally suffer from multiple sclerosis, including 1.1 million in the U.S. and Europe.

Since there isn't a cure for multiple sclerosis, treatment is focused on reducing the number of annual relapses in an effort to delay disease progression and nerve damage. Those treatments include a range of injectable drugs and a new class of oral pharmaceuticals that combined produce billions of dollars in annual sales.

Teva's Copaxone is one of the most widely prescribed of these treatments. In 2012, Copaxone's market share of MS scripts stood at 40%; however, the introduction of new treatments reduced the drug's market share to roughly 35% last year, and estimates suggest Copaxone's share will drop to 25% in 2014. Nonetheless, the drug still generated more than $1 billion in sales for Teva in the first quarter.

Biogen has been a dominant player in MS for years thanks to its injectable drugs Avonex and Tysabri, which combined to produce $1.2 billion in sales during the first quarter.

Meanwhile, Biogen's rising star Tecfidera won FDA approval in March 2013 and has already become the most widely used oral MS treatment in America, displacing Novartis' oral MS drug Gilenya, which had sales of $1.9 billion in 2013.

Sales of Tecfidera reached $500 million in the first quarter. That $2 billion annualized run rate is likely to head even higher this year as Tecfidera is now launching abroad. Biogen's drug is a big reason for Copaxone's market share decline.

Advancing a new therapy
The sheer size of the MS patient population and multiple blockbuster drugs have caught the attention of biotech companies such as Receptos that are eager to tap into this lucrative market.

Receptos' MS drug RPC1063 targets the S1P1R pathway, altering the migration pattern of S1P1R-expressed white blood cells so that they avoid areas of inflammation. Given that previous research suggests that S1P1R overexpression is found in both nonactive and active MS, RPC1063's ability to control S1P1R activity may succeed in reducing the number of MS relapses annually.

The company's phase 2 study wasn't designed to measure annualized relapse rates (that will be studied in phase 3), but rather to determine whether RPC1063 reduced the total number of MS lesions between the 12th and 24th week of treatment. The drug succeeded in reducing the number of lesions by 86%. The safety profile indicated that RPC1063 seemed to have a similar adverse event profile to placebo. 

If that holds up in late-stage studies, RPC1063 could have an advantage over competing drugs, many of which come with cardiovascular risk or danger to the liver.

Fool-worthy final thoughts
Receptos' phase 2 trial only involved 258 patients; the phase 3 trial, which kicked off in December, plans to enroll 1,300 patients. Whether the drug succeeds in reducing annual relapses and its safety profile holds up in the far larger patient population remains to be seen. Plenty of drugs perform well in midstage trials, yet fail in phase 3.

However, since the phase 3 trial pits RPC1063 head-to-head against Biogen's Avonex, a win could create a blockbuster. Fools should remember that RPC1063 is Receptos' lead drug, making it a speculative investment best suited only for aggressive investors.

Will this stock be your next multibagger?
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool recommends Teva Pharmaceutical Industries. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers