Teva Pharmaceutical Industries Ltd. (TEVA) recently amended its marketing and distribution agreement with Active Biotech for oral laquinimod, which is being developed for the treatment of relapsing-remitting multiple sclerosis (RRMS).
Teva had initially acquired exclusive rights to develop, register, manufacture and commercialize laquinimod worldwide, except for the Nordic and Baltic countries. As per the terms of the amended agreement, Teva will now have marketing and distribution rights in the Nordic and Baltic regions as well.
As a result of the amendment, Active Biotech is entitled to receive a higher royalty rate on sales in these regions compared to the royalty rate fixed in the original agreement that was signed in June 2004.
Laquinimod is the lead pipeline candidate at Teva. The phase III candidate received fast track designation in the U.S., which means that it could enter the market as early as late 2011, provided all goes well. Laquinimod is currently in two phase III studies – ALLEGRO and BRAVO – which are evaluating the efficacy, safety and tolerability of the candidate.
The multiple sclerosis (MS) market represents significant commercial potential. MS is the leading cause of neurological disability in young adults and it is estimated that more than 400,000 people in the US are affected by the disease. More than two million people may be affected worldwide.
The successful development and launch of laquinimod would help strengthen Teva’s multiple sclerosis (MS) drug portfolio. Being an oral formulation, laquinimod could provide an advantage over existing therapies that require injection or infusion.
Teva already has a multiple sclerosis product in its portfolio – Copaxone. Copaxone is Teva’s main branded product, which delivered global in-market sales of $776 million in the third quarter of 2009. However, the company is facing patent challenges from generic players like Sandoz, Momenta Pharmaceuticals, and Mylan Labs (MYL). As such, the successful development of laquinimod is important for the company.
We currently have an Outperform recommendation on Teva. We are impressed with the company’s strong performance in the first nine months of 2009. We expect Teva to continue posting strong revenues and earnings going forward, thanks to new product launches− both generic and branded.
We are also pleased to see Teva’s progress with its branded and biogenerics pipeline. Biogenerics should help drive growth in the long-term. Meanwhile, the acquisition of Barr Pharma should help Teva strengthen its position in the U.S. and expand its presence in Europe.
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