Teva's oral Copaxone could be doomed, says Tel Aviv analyst

Partner may stop funding trials of MS drug; Biogen's rival treatment Antegren is looking good
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Is Coral, the oral alternative to the injected version of the relapsing/remitting multiple sclerosis treatment Copaxone invented by Teva Pharmaceuticals (Nasdaq:TEVA) (TEVA) - Get Report, doomed?

It's likely, estimates analyst Kobbi Finkelstein of Tel Aviv-based Investech Securities.

In a research update rating Teva a Buy, Finkelstein noted that the Israeli drugmaker's partner in developing Coral, the Danish company H. Lundbeck, threatens to pull the plug on further financing unless European clinical trials show better results than were attained in the United States.

Teva has been covering test costs in the U.S. while Lundbeck is covering the costs in Europe. The European tests should be done in a matter of days, with final results in by year-end or early 2002.

On September 20 Teva reported that interim trial results for Coral, the oral form of Copaxone, had proved statistically inconclusive. Its share price took a beating as analysts chorused that investors were over-reacting.

In February this year Teva and Lundbeck agreed to cooperate on developing and commercializing oral Copaxone in Europe and several other markets. Lundbeck's retreat would create a problem for Teva, given the high cost of clinical testing.

Teva could continue the Coral development by itself, but will probably choose not to, Finkelstein estimates.

Another factor discouraging heavy investment in Coral is encouraging phase II trial results of potential rival treatment Antegren, under development by Biogen (Nasdaq:BGEN).

Antegen will not be available until 2005 at the earliest. But Coral's launch date has been delayed to 2004 at least after the disappointing initial results.

Antegren, which is also being tested against Crohn's disease, may seriously challenge Copaxone after 2005, Finkelstein writes.

Most treatments for RRMS are based on interferon, as is Biogen's other treatment for MS, called Avonex. Copaxone (glatiramir acetate) is the only available alternative to interferon-based treatments - so far.

Antegren (natalizumab) is a recombinant humanized monoclonal antibody. It will be the first treatment to compete with Teva in that niche of people sensitive to interferon.

Biogen is about to start phase III tests of Antegren as a mono-therapy and as an add-on to Avonex, Finkelstein adds.

In any case, 2005 is not tomorrow. Finkelstein lifted Teva's 12-month price target from $68 to $70, and also raised forecasts for the years to come. He estimates earnings of $2.48 per share in 2002, up from an earlier forecast of $2.33. For 2003 he raised his estimate from $2.70 per share to $2.86.