The recent introduction of oral therapies is rapidly transforming the way multiple sclerosis is treated. Biogen (NASDAQ:BIIB) has enjoyed rampant success with Tecfidera, and Basel, Switzerland-based Novartis (NYSE:NVS) isn't so far behind with Gilenya. Combined, the two drugs recorded $3 billion in sales during the first half of the year.

Novartisbuilding

Source: Wikimedia Commons.

With these next-generation therapies doing so well, you might think MS is the last indication that would be seeing lots of activity concerning two antibodies administered with a needle. Well, Novartis just handed a heap of money to GlaxoSmithKline for the privilege to develop injectable leukemia therapy Arzerra for a MS indication.

Oncology titan Roche (NASDAQOTH:RHHBY) is also headquartered in Basel and has stepped out of its wheelhouse to develop ocrelizumab for MS. This is surprising on a couple levels. For starters, the antibody failed a phase 3 rheumatoid arthritis trial several years back because of serious safety concerns. The company's lack of existing MS treatments make this move even more of a head-scratcher.

Gone cuckoo?
At this point you might think they're applying a Swiss Army knife strategy to drugmaking. Both programs exhibit symptoms of capital-seeking opportunity, but on closer inspection the reasoning is sound.

Let's begin with Novartis. During the first half of the year, Gilenya racked up $1.3 billion in sales, comprising about 5% of the company's total revenue for the period. That's well behind the $1.7 billion Biogen's more recently launched Tecfidera posted during the same period, but it certainly suggest the company can effectively launch another successful MS therapy.

Novartis picked up rights to Arzerra along with a slew of oncology compounds from Glaxo earlier this year in a giant $16 billion deal. Unfortunately for Novartis, that deal didn't include rights to develop those oncology compounds for autoimmune disorders such as MS. Even though the company has two clinical-stage MS candidates -- BAF312 and CJM112 -- it recently forked out $300 million upfront along with a $200 million milestone payment that will trigger when a phase 3 trial for Arzerra in MS begins. Another $534 million in potential milestones and royalties of up to 12% to Glaxo significantly dampen the deal's profitability. 

Sales of Arzerra have been somewhat disappointing so far. It's only natural that the company would want to take action to boost the return on its investment, but expanding Arzerra's label to MS could solve another problem; Gilenya could face generic competition as early as 2019. It would be a shame to see the inroads its sales force has made with neurologists and their patients go to waste.

A first
If approved, Arzerra will be entering a crowded field for the more common, relapsing remitting form of MS, or RRMS. Roche's ocrelizumab, on the other hand, is the first treatment to show efficacy for primary progressive MS, or PPMS, patients. This is the more aggressive form of the disease that affects an estimated 10% to 20% of the overall MS population.

Rochelogosmall

Source: Wikimedia Commons.

Ocrelizumab's unique efficacy in PPMS patients is doubly fortunate for Roche, as the drug has a tarnished safety record. Although early clinical trials are intended to weed out dangerous drugs before they reach larger phase 3 studies, here and there one squeaks past. In 2010, patient deaths in a rheumatoid arthritis trial nearly ended things for the otherwise promising therapy. Since the drug inhibits immune function, the sort of opportunistic infections that shut down the rheumatoid arthritis study could show up again in an MS trial. Given the life-threatening nature of PPMS, safety monitors should be less likely to stop the trial if they do occur.

Tangled web ahead
For investors in either Roche or Novartis, bringing one of these antibodies to market would be a nice bump, but it isn't about to break them if they eventually fail. Biogen shareholders, however, are all too familiar with volatility surrounding prospects for Tecfidera. Although it started with a clean record, recent safety concerns have been followed with guidance revisions and a subsequent market capitalization loss of more than $30 billion.

Roche may be developing ocrelizumab for PPMS, but that doesn't mean it poses no threat at all to Tecfidera, or Gilenya. If approved, it's not hard to imagine that some neurologists would use it off-label for their most difficult RRMS patients. The good news for Biogen is that it stands to earn juicy royalties of between 13.5% and 24% on U.S. sales of ocrelizumab, if approved by the FDA. Royalty revenues are typically high-margin, so even if ocrelizumab does gain some of Tecfidera's RRMS market share, Biogen would likely come out ahead anyway.

We've seen the effects safety data has on drug sales for less threatening forms of MS. During Arzerra's pivotal leukemia trial, 19 patients suffered fatal infections. The patients' disease probably bears the brunt of responsibility for those infections, but I don't see any new RRMS therapies reshaping this market unless they can boast a perfect safety record.

Cory Renauer has no position in any stocks 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.