STORYPHOTOMS Prize of $1.3 Billion Spurs Merck KGaA, Novartis (Update2)
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By Naomi Kresge
Feb. 13 (Bloomberg) -- Merck KGaA and Novartis AG are racing to market the first multiple sclerosis pill, a prize that may generate $1.3 billion a year in sales as patients switch from injectable drugs.
Merck and Novartis plan to ask regulators this year to approve tablets to fight the incurable illness. Initial test data showed that patients who took the drugs had fewer disease flare- ups than those who received placebo or existing treatments.
A pill may mean an end to painful injections or infusions that can cost $28,000 a year to control multiple sclerosis, which can rob people of their mobility and leave them with chronic aches and depression. Merck, of Darmstadt, Germany, and Novartis, of Basel, Switzerland, are running ahead of Teva Pharmaceutical Industries Ltd., Biogen Idec Inc. and Sanofi-Aventis SA in the chase for an oral treatment. The results may shake up the $6 billion multiple sclerosis market.
“It’s going to be a neck-and-neck race between Merck and Novartis,” said Markus Mayer, a Munich-based analyst for UniCredit SpA, after Merck released initial data last month.
The Teva, Biogen and Sanofi pills may not reach patients before 2012, according to Jack Scannell, an analyst for Sanford C. Bernstein Ltd. in London. Frost & Sullivan, a research company based in New York, predicts the market for drugs to treat early stages of multiple sclerosis may double by 2013.
Merck lost 1.79 euros, or 2.6 percent, to close at 65.98 euros in Frankfurt trading. Novartis climbed 14 centimes, or 0.3 percent, to 49.66 francs in Zurich.
Cancer Cases
Merck said in January that four patients were diagnosed with cancer during the late-stage trial of its medicine, known as cladribine. An independent monitoring board didn’t consider the cases a safety concern because there were too few to show a statistical significance, said Phyllis Carter, a Merck spokeswoman.
Conceived as both a leukemia and multiple sclerosis drug, cladribine was approved to treat the blood cancer more than 10 years ago and has been used by doctors in injected form to treat multiple sclerosis in so-called off-label use.
Novartis has also reported two fatal infections and seven successfully treated cases of skin cancer in patients who took its candidate, FTY720. Final test results later in the year will demonstrate how safe each of the medicines is.
If the tablets aren’t linked to such side effects, either could “revolutionize treatment,” Citigroup analyst Mark Dainty wrote in a note to clients in January. The products may generate a total $2.6 billion in revenue in four years’ time, according to the analyst.
Vulnerable
Merck’s existing drug Rebif, which is injected by the patient three times a week, had revenue of 1.22 billion euros ($1.57 billion) in 2007. Rebif loses patent protection in 2012, leaving the German drugmaker vulnerable to generic competition. Merck reports fourth-quarter results on Feb. 18.
Rebif vies with two other so-called beta interferons, Betaseron by Bayer AG and Biogen’s Avonex, and with a fourth injected therapy, Copaxone from Sanofi and Teva. Interferons generally cut patients’ rate of flare-ups by about 25 to 30 percent, Scannell of Bernstein said.
To take over the market, the oral medicines first need to overcome safety concerns.
“Concerns over cancer and opportunistic infection are the real barriers to what could be substantial first-line use in a multiple sclerosis market worth around $10 billion a year,” Scannell said in a note to clients this week.
Infection Risk
Unlike interferons -- genetically produced versions of natural proteins that suppress the entire immune system -- cladribine and FTY720 affect only certain types of cells, said Doug Brown, research manager for the Multiple Sclerosis Society in London who doesn’t have financial ties to either Merck or Novartis.
The pills work by lowering the amount of immune cells in the body, leaving patients susceptible to infections, Brown said. Long-term side effects from cladribine are unproven because leukemia patients took the drug on a shorter-term basis than multiple sclerosis sufferers would do, he said.
“We don’t see anything in the study that could prevent the drug from being given to patients,” said Bruno Musch, head of global clinical development unit for neurodegenerative diseases for Merck, in an interview before the preliminary results were released last month.
Emma Delahay, 30, a multiple sclerosis patient from Canterbury, England, who started taking injected Rebif about two and a half years ago and has since switched to Copaxone, said she suffered side effects, including skin rashes, while she was adjusting to the shots.
Disruptive
A pill would end the disruptive after-dinner routine of organizing syringes, preparing her shots and choosing a new place to inject herself every day, she said.
“Even though I can inject as part of my daily routine now, it’s still having to prepare myself,” she said. “With taking an oral therapy, it would be a second. With my injection, even though it’s not that long, it’s five or 10 minutes. It’s the preparation time, making sure my injections get stored properly.”
Merck’s study results suggest cladribine and FTY720 could be as effective as Tysabri, the newest injected multiple sclerosis drug from Irish drugmaker Elan Corp. and Cambridge, Massachusetts-based Biogen Idec Inc., according to Scannell.
Tysabri has been plagued by safety concerns, with Biogen and Elan pulling the drug temporarily from the market in February 2005 after two patients died of a rare brain infection, progressive multifocal leukoencephalopathy. Five patients taking Tysabri have been diagnosed with the infection since it was reintroduced to the U.S. in 2006. One patient died.
Risk-Benefit
For patients, “it will be a case of weighing up the risk- benefit,” said Brown of the U.K. multiple sclerosis group. “Doctors and neurologists will be weighing it up as well.”
In tests, cladribine reduced the relapse rate for the disease by more than half compared with patients given a dummy pill in a two-year study, Merck said last month.
The pills, like the injected therapies, work against so- called relapsing-remitting multiple sclerosis, the most common form among the estimated 2.5 million people with the disease, according to the U.S. National Multiple Sclerosis Society. Symptoms such as loss of vision and numbness flare up and then subside, and the likelihood of full recovery can sink with each attack. There is no treatment for rarer forms of the disease in which patients experience a steady decline.
$1 Billion a Year
Merck, which isn’t affiliated with U.S. drugmaker Merck & Co., said last fall cladribine could be its next $1 billion-a- year seller.
In December, Novartis said patients who took its candidate, known generically as fingolimod, had 38 to 52 percent fewer attacks than those on Biogen’s Avonex.
The Novartis pill may surpass $1 billion in annual sales, Chief Executive Officer Daniel Vasella said on a conference call with analysts on Jan. 28.
The Swiss company made its first foray into the multiple- sclerosis market this year with Extavia, an injectable interferon identical to Bayer’s Betaseron. Extavia was introduced last month in Germany and Denmark. Extavia will be important for Novartis to gain a foothold in the multiple sclerosis market before it begins selling FTY720, Vasella said.
