Biogen's (NASDAQ:BIIB) Tecfidera is on its way to blockbuster status in the highly competitive multiple sclerosis indication. That's great news for Biogen, which needed the drug to succeed in order to protect its multibillion-dollar multiple sclerosis drug franchise.
An important win
The MS treatment market has previously been dominated by Biogen's Avonex and Tysabri, and Teva Pharmaceutical's Copaxone -- blockbuster drugs delivered by injection. Combined, those drugs generated sales of $8 billion in 2012.
But, a new generation of drugs and upcoming patent expiration for Copaxone are disrupting current treatment protocols and shifting demand to new oral drugs including Novartis' (NYSE:NVS) Gilenya and Sanofi's (NYSE:SNY) Aubagio.
Those new drugs have been winning share against Biogen with Novartis' Gilenya, approved in 2010, generating sales of $518 million in the third quarter, up 63% year-over-year. Novartis sales for Gilenya increased 44% in the U.S. and 90% in the rest of the world from a year ago.
Sanofi's Aubagio, approved in September 2012, had third-quarter sales of 44 million euros, representing solid growth given combined sales for the first half of the year were 53 million euros.
At the same time, growth for Biogen's legacy Avonex and Tysabri has stalled. Avonex sales slipped 4% year-over-year to $733 million, and Tysabri sales were flat at $403 million.
As a result, Biogen needed Tecfidera to succeed in order to solidify the company's MS franchise and shift the company back to sales growth for the indication.
A blockbuster in the making
Last week, I suggested you watch Biogen's third-quarter report closely for signs Tecfidera may live up to those high hopes. The early results suggest Tecfidera could become a blockbuster by the middle of next year.
In the quarter, Tecfidera racked up $286 million in sales, more than industry forecasts, according to ISI Group. The performance comes following reports of shortages in the second quarter as wholesalers built up inventory.
It also suggests that payers aren't balking at the drug's $54,000 a year price tag, a price slightly lower than Novartis Gilenya's $58,000, but higher than prior-generation drugs Avonex and Tysabri.
The Foolish final take
Tecfidera comes at an important time to solidify Biogen's MS franchise. Given the significant sales up for grabs from legacy injectibles, Tecfidera's robust third-quarter performance leapfrogs Novartis' Gilenya, making it the top-selling oral MS drug.
That performance is more impressive when you consider the drug is only approved in the U.S., Canada, and Australia. Sales will climb significantly once Tecfidera wins approval in other key developed markets including the EU and Japan.
Of course, any number of events can derail growth, which could shift demand back to Novartis' Gilenya. You need only look back to Tysabri's safety risks following its launch for an example. But for now, it appears Biogen's Tecfidera will protect its MS franchise.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC, an institutional research firm. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd also owns Gundalow Advisors, LLC, a high net worth advisory focusing on ETFs. Gundalow's clients do not have positions in the companies 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.