Recently, Biogen Idec, Inc. (BIIB) and partner Elan Corporation (ELN) announced that the European Commission (EC) has approved an update to the label for their multiple sclerosis (MS) drug Tysabri (natalizumab) in the European Union (EU). The updated label includes anti-JC Virus antibody status as an additional factor that could help stratify the risk of progressive multifocal leukoencephalopathy (PML) occurring in patients treated with Tysabri.
The EC’s decision for the label update does not surprise us as in April 2011 the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMEA) had backed the inclusion of the additional risk in the Tysabri label.
The updated label in the EU will provide patients (treated with Tysabri) as well as doctors additional assistance in identifying the risk of them being affected by PML. Apart from approving the label update, the EC also renewed the five-year Marketing Authorisation for Tysabri in the EU.
With Tysabri being an important growth driver for Biogen and Elan, we remain concerned that an increase in the number of PML cases associated with its use could lead to a slowdown in Tysabri sales going forward. Any disruption in Tysabri sales would be devastating for the companies.
The companies are seeking a similar label update for Tysabri in the US. On December 22, 2010, Elan and Biogen submitted a supplemental Biologics License Application (sBLA) to the US Food and Drug Administration seeking permission to include anti-JC Virus antibody status as one potential factor that could help stratify the risk of PML occurring in patients treated with Tysabri.
Apart from Tysabri, the other key product in Biogen’s MS franchise is Avonex. However, competition in the multiple sclerosis market has intensified with the entry of Novartis’ (NVS) Gilenya. We remain concerned that being the first oral treatment to have gained US approval for the treatment of MS, Gilenya could take share away from Biogen’s MS products.
Our Recommendation
We have a ‘Neutral’ stance on Biogen. The stock carries a Zacks #3 Rank (Hold rating) in the short run. We are also Neutral on Elan which carries a Zacks #3 Rank.
