The market for multiple sclerosis drugs is worth $19 billion annually and treatment advances could lead to significant shifts in market share. Can market share Goliath Biogen (NASDAQ:BIIB) sidestep competitive risk? Or, will challenges from big biopharma companies including Celgene Corp. (NASDAQ:CELG) and Roche Holdings (NASDAQOTH:RHHBY) reshape the market landscape? To better evaluate how this market may look in the future, let's take a closer look at this disease and the treatments that address it.
What is multiple sclerosis?
Multiple sclerosis, or MS, is a central nervous system disorder that can cause progressively worse symptoms such as muscle weakness, blurred vision, and numbness.
MS is typically diagnosed in a person's 20's or 30's and there are currently more than 2.3 million Americans suffering from it.
MS occurs when an immune system response damages the myelin sheath that surrounds and protects nerve fibers. The myelin sheath acts like insulation that improves the nerves ability to transmit and receive signals. As the myelin sheath is increasingly damaged, nerves lose their ability to transmit information quickly and efficiently, causing the symptoms of MS.
Currently, there is no cure for MS. However, the progression of MS can be slowed by medicine that can slow disease progression by mediating immune system responses. The most prescribed therapy for MS is Teva Pharmaceutical's (NYSE:TEVA) Copaxone, which is prescribed to about 30% of MS patients.
Although Copaxone is the most widely prescribed MS therapy, it's Biogen that hauls in the most money every year from treating MS.
Biogen markets the top selling injection drugs Avonex and Tysabri and it also markets the best selling oral MS drug, Tecfidera. Last year, Biogen generated more than $8 billion in sales across its MS drug product lineup.
Other companies that market top selling MS therapies include EMDSerono, which markets Rebif, Novartis (NYSE:NVS), which markets the oral MS drug Gilenya, and Sanofi SA, which markets Aubagio.
Treating any disease would ideally involve one single shot or pill. However, because MS is a chronic disease, MS patients are treated continuously throughout their lifetime. Because of this, most of the innovation that's occurring in MS treatment involves creating treatments that reduce patient burden and boost adherence rates, thus minimizing MS flare-ups.
Of MS treatments launched in the past five years, the most game-changing have been those that are taken orally, rather than injected.
The first oral MS drug to reach the market was Novartis' Gilenya, which won approval in 2010. Gilenya limits the migration of certain blood cells in the lymph nodes to the brain and spinal column and in Q2, Gilenya sales were $811 million, up 17% in constant currency from a year ago.
Sanofi's Aubagio, which won approval in 2012, and Biogen's Tecfidera, which won approval in 2013, are also taken orally. Aubagio is an immunomodulary drug that reduces the rapid division of cells, including T-cells, and Tecfidera activates the nuclear erythroid 2-related factor 2 transcriptional pathway to help keep the immune system in check.
Since oral drugs are preferred by patients, all three of these drugs have become big sellers. Last year, their combined sales exceeded $8 billion. Of the three, the biggest seller is Tecfidera, which has annualized sales of about $4 billion, and the fastest growing drug is Aubagio. Aubagio's sales jumped 64% year-over-year to $279 million in the first quarter.
The embrace of oral MS drugs has come largely at the expense of prior generation injection-based therapies. The biggest losers have been Biogen's Avonex, a beta peg-interferon, and EMDSerono's Rebif. In 2015, Avonex and Rebif sales slipped 13% and 18%, respectively. .
Copaxone, which is also delivered via injection, has seen its sales increase in the past year, but much of that growth has come due to price increases. In the U.S. Copaxone's market share has fallen due to rising popularity of oral drugs and the loss of patent protection. Last year, the FDA approved a generic biosimilar to Copaxone that's less expensive and as a result, Copaxone's U.S. MS market share slipped to 29.8% from 30.6% a year ago.
In a bid to sure-up sales for injection therapies, drugmakers are reformulating them so that they last longer and thus, require fewer monthly doses. For example, to protect Avonex, Biogen launched Plegridy, a reformulation of Avonex. Plegridy can be dosed every two weeks rather than every week and in Q2, Plegridy's sales were $123 million, up 65% from Q2, 2015.
Similarly, Teva Pharmaceutical has been able to protect the majority of its Copaxone market share by launching a longer-lasting version that's dosed three times weekly, rather than daily. In Q1, long-lasting Copaxone represented 81% of Teva Pharmaceutical's total Copaxone prescriptions in the U.S.
New drugs are coming
The MS treatment market is moving more quickly than ever and new drugs that are under development at Roche Holdings and Celgene Corp. could make it to market soon.
Roche Holdings recently filed for FDA approval of Ocrevus, an injection-based therapy that's dosed once every six months. In trials, Ocrevus was the first MS drug to improve symptoms in both relapsing MS and primary MS patients. Based on those results, the FDA has fast-tracked Ocrevus' application and a decision is expected by regulators on Dec. 28. If its approved, this drug could conceivably be used to treat more than 90% of all MS patients. Ocrevus' efficacy and large addressable market could make it a blockbuster drug. Roche Holdings will capture the lion's share of the profit from its sale, however, Biogen won't be left out in the cold. Biogen licensed Ocrevus to Roche Holdings back in 2010 and as a result, it will receive a royalty of roughly 30% of sales.
Last year, Celgene paid $7.5 billion to acquire Receptos so that it could get its hands on Receptos' oral SP-1 modulating MS drug, ozanimod. In trials, ozanimod has shown that it can improve MS symptoms with arguably best-in-class safety. If additional studies confirm that, then an eventual approval could significantly shake-up the oral MS marketplace. Results from a Phase 3 trial that could support an application for FDA approval are expected in 2017.
In addition to Ocrevus and ozanimod, the FDA recently gave a green light to AbbVie, Inc. (NYSE:ABBV) to begin selling Zinbryta. Zinbryta is taken once-every six months and in trials, it outperformed Biogen's Avonex. However, Zinbryta's label includes a black box warning that could crimp its ability to garner market share in all but tough-to-treat MS patients. AbbVie licensed Zinbryta from Biogen and the two companies will split any profits or losses on the drug.
Staying the course
Although Roche and Celgene's new drugs could reshape the MS market, Biogen isn't sitting idly by. It will benefit some from Ocrevus' success and it's still funneling big money into MS research. Recently, Biogen reported disappointing results for one of its highest-profile next-generation MS drugs, but it still has MT-1303 in the wings. MT-1303 is a SP-1 modulating drug that Biogen licensed from Mitsubishi Tanabe last year and if it succeeds in trials, then it could blunt the threat on the horizon posed by Celgene's ozanimod.
Overall, the MS market is big and it's growing every year and because there are increasingly more MS patients and patients are longer-living than ever before, the tailwinds supporting MS drugmakers are significant. Because of that, investors should keep a close eye on these companies and their sales trends. After all, investing in MS drugmakers could be profit-friendly.