What happened
After the Food and Drug Administration surprisingly gave a green light to the company's Copaxone knockoff, shares in Mylan Inc. (MYL) are surging 19.5% higher today at 11:30 a.m. EDT.
So what
Teva Pharmaceutical (TEVA -3.04%) received bad news today when the FDA unexpectedly approved Mylan's long-lasting generic alternative to Copaxone 40 mg.
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As a refresher, Copaxone is the most prescribed multiple sclerosis drug and it represents about 20% of Teva Pharmaceutical's sales. Patents protecting the original 20 mg formulation of Copaxone previously expired. However, Teva Pharmaceutical kept competitors at bay by launching a 40 mg version that could be taken every three days instead of every day.
Generic drugmakers, including Mylan, filed suit against Teva Pharmaceutical for the move, calling into question the validity of patents protecting the longer-lasting formulation. Courts have agreed with Teva Pharmaceutical's competitors so far, but an appeal is still in process.
Today, the FDA gave a green light to Mylan's 20 mg and 40 mg Copaxone copycats, clearing the way for Mylan to launch the 40 mg version at risk. An at-risk launch means that if Teva Pharmaceutical eventually wins its appeal, Mylan could have to pay stiff damages on any sales of its generic. Nevertheless, it appears Mylan plans to make its Copaxone alternative available immediately.
Now what
This is good news for Mylan investors, but it's bad news for Teva Pharmaceutical and Momenta Pharmaceuticals' (MNTA) investors.
Copaxone produces about $4 billion in annual sales for Teva Pharmaceutical, and Momenta Pharmaceuticals markets a 20 mg biosimilar with Novartis that's likely to get prescribed less frequently now that Mylan's 20 mg and 40 mg versions are available. Last quarter, Momenta Pharmaceutical reported $19.1 million in product revenue from its 20 mg product.
Clearly, the potential to secure a substantial market share provides a nice tailwind for Mylan, which has seen its shares weighed down by its EpiPen debacle. Teva Pharmaceutical, however, might be a bigger loser than Momenta Pharmaceuticals.
Momenta Pharmaceuticals and Novartis have already submitted their own 40 mg version of Copaxone to the FDA for approval, and a decision is pending the resolution of manufacturing questions for their fill/finish partner, Pfizer.
In June, Momenta Pharmaceuticals said it could get an FDA OK for its 40 mg version this year so investors might not want to overestimate the negative impact of Mylan's news today. Mylan's being the first to secure approval for a 40 mg version means it should get 180-day exclusivity, but based on that timeline, Momenta Pharmaceuticals' version could still hit the market sometime next year.
