Roche (RHHBY) won U.S. approval Tuesday for a new, long-acting drug to treat multiple sclerosis that is expected to deliver billions of dollars in sales to the Swiss pharma giant while potentially cutting into Biogen's (BIIB) core business.

The Roche multiple sclerosis drug, to be sold under the brand name Ocrevus, is the first FDA-approved treatment for the more severe primary progressive (PPMS) form of the disease. PPMS patients, accounting for about 10% of cases, suffer from steadily worsening neurological and motor symptoms.

The FDA also approved Ocrevus to treat the more common relapsing remitting form of multiple sclerosis. These patients, about 90% of cases, also experience degenerative symptoms but as intermittent episodes of exacerbation and recovery.

Roche has set the price of Ocrevus at $65,000 per year, before insurer discounts and rebates, which is a 25% discount to Rebif, the interferon from Merck KGaA approved for MS 14 tears ago, says spokesman Ed Lang. "Multiple sclerosis medicines, on average, cost almost four times more today than they did 12 years ago. We feel the industry needs to start to reverse this trend," said Lang. 

Ocrevus is more likely to compete for MS patients with Biogen's Tysabri, which costs $78,000 per year. Ocrevus is still priced lower but the difference is narrower. 

Analysts have forecast Ocrevus peak sales of $4-5 billion. Roche will have the progressive segment to itself. Competition for relapsing MS will be more challenging with 13 drugs from Biogen, Sanofi (SNY) , Teva (TEVA) , Merck KGaA and Novartis (NVS) approved already. Insurers are also expected to become more assertive about MS drug reimbursement and patient access in order to counter regular (some would say exorbitant) price increases.

Biogen co-developed Ocrevus with Roche and will earn royalties on sales. However, many MS patients currently prescribed Biogen drugs Tecfidera and Tysabri could switch to Ocrevus, which is administered by an intravenous infusion twice a year.

Last year, Biogen's MS drugs contributed $8.7 billion, or 78%, of the company's total revenue, so market share losses to Ocrevus could have a negative impact on the company top and bottom lines.

More competition is on the way, Celgene (CELG) plans to submit ozanimod for marketing approval in relapsing MS by the end of the year.

Current sell-side consensus has Biogen with flat MS sales growth in US this year followed by sales declines in 2018-2021, according to Leerink analyst Geoff Porges.

Ocrevus is a humanized monoclonal antibody that targets a protein known as CD20 found on B cells, a type of immune cell. In MS, the body's own immune system is thought to attack myelin, a fatty, protective sheath that surrounds nerve fibers in the brain and spinal cord. A breakdown in myelin damages underlying neurons and interferes with electrical signals that the brain sends through the spinal cord to the rest of the body.

Roche conducted two successful phase III studies in relapsing MS and a single phase III stiudy in progressive MS.

In the relapsing MS studies, Ocrevus demonstrated superiority to high-dose Rebif in reducing relapses, disability progression and brain lesion activity over two years.

In the progressive MS study, Ocrevus reduced the risk of confirmed disability progression compared to placebo over 12 and 24 weeks.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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