Novartis AG (NVS) received a huge boost recently with the US Food and Drug Administration (FDA) approving its oral multiple sclerosis (MS) drug, Gilenya. Gilenya is the first oral treatment to gain US approval for the first-line treatment of relapsing forms of MS. The drug is shown to significantly reduce relapse rates and delay disability progression.
The FDA approved Novartis’ drug along with a Risk Evaluation and Mitigation Strategy (REMS) which will inform patients and physicians on the safe use and risks associated with the drug.
The FDA has recommended that patients should be monitored for a decrease in heart rate on starting treatment with Gilenya. The drug has also been seen to increase the risk of infections. The agency also recommended ophthalmologic evaluation as instances of serious eye problems were observed in patients taking the drug.
The approval of the drug is a significant milestone for Novartis. Earlier this year, an FDA advisory panel had voted unanimously in favor of approving the drug. The panel had unanimously concluded that Gilenya demonstrated safety and effectiveness in treating relapsing remitting MS.
The MS market represents significant commercial potential for Novartis. According to the National Multiple Sclerosis Society, about 400,000 people in the US and 2.1 million people across the world suffer from MS.
Being the first oral treatment to have gained US approval for the treatment of MS, Gilenya should see significant uptake. Gilenya managed to beat other oral treatments like Merck KGaA’s (MRK) oral formulation of cladribine to the US market. Gilenya is currently under regulatory review in the EU and other countries.
Competition Heats Up for Biogen
Meanwhile, shares of Biogen Idec (BIIB), which has two major MS drugs in its portfolio, were down 5.8% on Gilenya’s approval. Once launched, Gilenya will be competing primarily with Biogen’s Avonex and Tysabri for a share of the MS market. Results from a study comparing Gilenya with Avonex showed that Gilenya reduced relapse rates by 52% at one year compared with Avonex.
Besides Avonex and Tysabri, Gilenya will be competing with other MS treatments like Teva’s (TEVA) Copaxone and Merck KGaA’s Rebif. Being an oral therapy, Novartis’ Gilenya could find quick acceptance as currently available therapies require injection or infusion.
Neutral on Novartis
We currently have a Neutral recommendation on Novartis, which is supported by a Zacks #3 Rank (short-term “Hold” rating). While we are pleased with Gilenya’s approval, the product could start facing competition soon from another oral MS therapy if Merck KGaA’s oral cladribine succeeds in gaining US approval by year-end.
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