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Novartis' Is Challenging Biogen on Biogen's Own Turf

By Todd Campbell – Oct 26, 2016 at 11:02AM

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Sales of Novartis' oral MS drug Gilenya are growing more quickly than Biogen's Tecfidera in 2016.

Biogen Inc. (BIIB -0.66%) may be the Goliath in the $17 billion (and growing) market for multiple sclerosis (MS) treatment, but it's Novartis' (NVS 0.29%) Gilenya, not Biogen's Tecfidera, that's growing more quickly this year.

Image source: Novartis.

Some background

MS is a central nervous system disorder caused when the immune system incorrectly damages the protective myelin sheath surrounding nerve fibers, causing nerves to lose their ability to transmit information quickly and efficiently.

Typically, MS patients are diagnosed in their 20s or 30s and MS disease progression can lead to increasingly worse symptoms, including muscle weakness, blurred vision, and numbness. There are roughly 400,000 people suffering from MS in the U.S., and globally, about 2.5 million people have MS.

Although there isn't a cure for MS, disease progression can be slowed by mediating immune system responses via ongoing treatment. In the past, these treatments were injection-based, such as Teva Pharmaceutical's top-selling Copaxone and Biogen's Avonex, but increasingly, patients are being prescribed oral alternatives including Novartis' Gilenya and Biogen's Tecfidera.

Battling for market share

Blockbuster MS drugs like Avonex, Tysabri, and Tecfidera mean Biogen's MS market share is north of 30%, however, Tecfidera's sales growth is trailing Gilenya's in 2016.

Gilenya, which won FDA approval in 2010, was the first oral MS drug to become available, but when Biogen launched Tecfidera in 2013, it successfully leveraged its global MS footprint to steal a lot of Gilenya's thunder. In Tecfidera's first full year on the market, it racked up $2.9 billion in sales and overtook Gilenya as the most prescribed oral MS drug.

Recently, however, momentum appears to be shifting back to Gilenya. Through the first nine months of 2016, Gilenya's sales are up 15% year over year to $2.3 billion, while Tecfidera's sales are up 12% to $2.97 billion. And in the third quarter, Gilenya's sales increased 15% from a year ago to $790 million, while Tecfidera's sales improved 10% to $1.03 billion.

A shifting treatment landscape

Gilenya growth may be outpacing Tecfidera this year, but both of these drugs are growing sales a far cry slower than Sanofi's (SNY 1.17%) Aubagio, another oral MS drug that's been on the market in the U.S. since 2012. New treatments on the horizon could cause additional shifts in market share.

While Sanofi hasn't reported third quarter results yet, Aubagio's sales grew 61% to $648 million in the first six months of this year. The reasons behind Aubagio's rapid growth may be twofold. First, while cases of a very rare, but life-threatening, brain disease have occurred in both Gilenya and Tecfidera patients, they haven't in Aubagio patients. Second, Aubagio study results released over the past couple years suggest Aubagio can slow brain volume loss in MS patients who are in the earliest stages of the disease, potentially making it more useful in newly diagnosed patients than other drugs.

Looking ahead, competitors eager to tap in to this multibillion-dollar market have drugs fast-approaching the finish line. In December, the FDA is set to issue a go/no-go decision on Ocrevus, an MS therapy that Roche developed under a license from Biogen, and late-stage studies are under way at Celgene on ozanimod, a potential next-generation oral alternative to Gilenya, Tecfidera, and Aubagio.

Tying it together

The market for MS therapy is big and Biogen isn't likely to give up its dominant position in the indication easily. The company is developing new therapies that it hopes can insulate it against competitors, including Novartis, Sanofi, and Celgene. One of the most intriguing of these drugs is MT-1303, a SP-1 modulating drug that Biogen licensed from Mitsubishi Tanabe last year that works similarly to ozanimod.

Overall, the MS market is moving quickly toward better treatments that reduce patient burden and work better. While Biogen's Tecfidera is winning the race right now, Gilenya, the second best-selling drug in the oral category is playing catch-up, and other competitors are taking aim at it too. Therefore, investors need to keep a close eye on these top sellers sales trends. 

Todd Campbell owns shares of Celgene. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. Like this article? Follow him on Twitter where he goes by the handle @ebcapital to see more articles like this.

The Motley Fool owns shares of and recommends Biogen and Celgene. 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.

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