Those cheers you heard coming from Switzerland weren't because Novartis (NYSE: NVS) got a drug approved. They were because Merck KGaA's failed to gain approval.
The German drugmaker said yesterday that the Food and Drug Administration had turned down its multiple sclerosis drug cladribine. The pill would have competed with Novartis' Gilenya, which gained FDA approval last year.
For the foreseeable future, Gilenya will remain the only oral drug on the market that slows down relapses in multiple sclerosis patients. Merck KGaA will likely have to run additional clinical trials to characterize the risk-benefit ratio for cladribine. Biogen Idec (Nasdaq: BIIB) and Teva Pharmaceutical (Nasdaq: TEVA) both have an oral multiple sclerosis drug in the clinic, but they still have to read out phase 3 data and then undergo FDA scrutiny.
Acorda Therapeutics (Nasdaq: ACOR) has an oral drug, Ampyra, but it treats a symptom of multiple sclerosis -- the inability to walk -- rather than the underlying disease.
The year or more head start should help Novartis, but it's still going to be an uphill battle. In theory, the pill form should make it easier to compete against drugs that have to be injected: Teva's Copaxone, Biogen's Avonex, Bayer's Betaseron, and Rebif, which is sold by Merck KGaA and Pfizer (NYSE: PFE). But those drugs have dominated the space for years. Doctors have experience with them, and with a disease as deleterious as multiple sclerosis, doctors will take efficacy and side effects into account over needle pricks.
When it released earnings at the end of January, Novartis said it had sold $13 million worth of Gilenya in the U.S. since the drug launched in October. That's not terribly impressive, but the party is just getting started. Thankfully for Novartis shareholders, Merck KGaA didn't rain on it.
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