What Price Tysabri?
Updated from 8:00 a.m.
Biogen Idec shares were up 72 cents in recent trading; Elan shares were off 40 cents.
My colleague Robert Steyer wrote a good summary of the approval, so no use repeating the basics here. As I pointed out last night in this space, clinical data from the Sentinel combination study -- unveiled for the first time in the Tysabri label -- is way better than what Wall Street was expecting. The annualized relapse rate was 0.78 for Avonex placebo patients compared to an annualized relapse rate of 0.36 for patients taking Tysabri-Avonex. That's a 54% improvement, again better than expected.Whether this impressive data drives combination usage (and minimizes Avonex cannabilization for Biogen Idec) remains to be seen. The gating factors here will be the expected high price of combination therapy, insurer willingness to pay that high price, and a somewhat clumsy administration schedule (monthly Tysabri infusion at a hospital/infusion center plus weekly patient self-injections of Avonex). Plus, the Tysabri monotherapy data is so stellar that doctors may just choose Tysabri alone in patients who fail Avonex or rival drugs like Serono's (SRA) Rebif, Teva's (TEVA) Copaxone and Chiron's (CHIR) Betaseron. On a joint conference call Wednesday morning, executives with Biogen Idec and Elan would not disclose Tysabri's selling price, saying pricing information would be disclosed over the next few days as the drug is launched. Guesstimates have ranged from $20,000/year to as much as $30,000/year. By comparison, Avonex, Betaseron and Copaxone cost about $13,000 per year, Rebif $16,500 per year. The Sentinel combination study enrolled multiple sclerosis patients who were already taking Avonex, but who were suffering relapses of their disease. One group of patients was given Tysabri plus Avonex, the other group Avonex and a placebo. I discussed the impressive efficacy results above, but one problem with this study design is that it's difficult to determine whether it's the combination of Tysabri and Avonex that is helping patients, or simply Tysabri alone. In order to fully answer the question, the study would have had to be designed with a group of patients taking Tysabri alone, but that wasn't done. On its conference call, the companies acknowledged that the Sentinel study doesn't really provide enough information to answer all the questions about the utility of combination therapy. But they stressed that doctors will make decisions based on the individual needs of their patients and that the data collected does make a strong case for combination therapy. Overall, Biogen Idec and Elan say their marketing efforts for Tysabri will be focused on so-called "quitters" -- MS patients who are not currently being treated because they cannot tolerate existing drugs or because those drugs are no longer effective. The companies estimate that there are 40,000 to 50,000 such patients in the U.S., with similar numbers in Europe. Tysabri will also make substantial inroads with newly diagnosed MS patients, the companies said, adding that MS patients that are doing well on existing drugs like Avonex or Rebif will not likely switch until those drugs stop working. Based on these commercial opportunities, Biogen Idec and Elan believe they can grow the overall MS market to $6 billion annually from $4 billion today. Sell-side estimates generally peg Tysabri's peak sales potential for multiple sclerosis at between $1 billion and $2 billion. The drug is also being tested as a treatment for Crohn's disease and rheumatoid arthritis, which could boost sales eventually.
I've been in email contact with a practicing neurologist who treats MS patients (he's also a RealMoney subscriber) who is quite impressed with Tysabri's efficacy, both as monotherapy and combination. He says he will be using Tysabri as a stand-alone drug in most of his MS patients (new patients and those failing other therapies.) Combination therapy will be a harder sell, he says. Before he's entirely sold on Tysabri, this doc is also very interested in seeing the two-year efficacy and safety data for the drug, which we should get early next year. The sell-side analysts notes published so far are all overwhelmingly positive, although some are also taking a wait-and-see attitude about Tysabri combination usage (you can bet there will be a glut of doctors surveys conducted over the next days and weeks to gauge their reaction to the data.) There is also the question of how much of this good news is already priced into the respective stock prices of Biogen Idec and Elan. As for the somewhat funny name, Biogen Idec said the FDA objected to the drug's original name, Antegren, because it was too similar to some existing drugs, including Millennium Pharmaceutical's Integrillin. "The name [Tysabri] is unique, you'll remember it," said one Biogen Idec executive, on the call.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV