Paris-based biotech firm Sanofi (NYSE: SNY) has just received U.S. FDA approval for its multiple sclerosis drug, Aubagio. This will enable the drug manufacturer to compete in a $12 billion market, amidst cautionary notes sounded by several analysts that Aubagio may have an uphill battle against more established medications.
Aubagio is intended for early-stage patients, and it is administered once daily. It is also known by its scientific name, teriflunomide. However, the drug is not as effective as Novartis AG’s (NYSE: NVS) Gilenya – the first multiple sclerosis drug approved in Europe – or Elan Corp. (NYSE: ELN) and Biogen Idec Inc.’s (NASDAQ: BIIB) Tysabri. And Biogen’s orally-administered BG-12 is also on track to receive U.S. approval by the end of this year.
Aubagio “has clear limitations,” [Berenberg Bank analyst Alistair] Campbell wrote. “We doubt the drug will seriously affect Gilenya or Tysabri, where prescriptions are largely driven by efficacy.”
It’s possible that Aubagio may earn up to $330 million in annual sales by 2016. Sanofi shares dropped to 66.91 euros (down by 0.6 percent) in Paris on the news. So far this year, Sanofi has gained 24 percent, including reinvested dividends, while the Bloomberg Europe Pharma Index has seen a return of just 14 percent.
One factor that may swing things Sanofi’s way is the imposition of new safety precautions on Novartis’s multiple sclerosis drug by both U.S. and European regulators after 15 patient deaths were linked to the use of Gilenya.
Last year, Sanofi CEO Chris Viehbacher led the company’s $20.1 billion purchase of Genzyme Corp., an American biotech company. The acquisition handed Sanofi another experimental multiple sclerosis drug called Lemtrada. Currently, Sanofi is relying on both Aubagio and Lemtrada to help it prove itself on the marketplace in order to recoup revenue losses from generic competition.
But a review of Lemtrada was turned down by the FDA, and Sanofi intends to resubmit a request for approval in the near future. Aubagio, for its part, boasts a relapse rate for patients on the drug that is 30 percent lower than those on a placebo. The drug comes with cautionary statements explaining the risk of liver toxicity and birth defects.
Aubagio will cost $45,000 a year in the U.S., 28 percent cheaper than Gilenya.