Novartis Gains After FDA Panel Backs First MS Pill (Update2)

June 11, 2010, 12:27 PM EDT

By Catherine Larkin

June 11 (Bloomberg) -- Novartis AG rose in Zurich trading after winning a U.S. regulatory advisory panel’s backing to introduce the first pill to treat multiple sclerosis.

Novartis’s Gilenia should be “generally recommended” as an initial treatment for MS, advisers to the Food and Drug Administration said in a 21-3 vote yesterday in Silver Spring, Maryland. The panel voted unanimously in favor of the pill’s safety and effectiveness. The agency, which usually follows its panels’ recommendations, though isn’t required to do so, is scheduled to decide whether to approve Gilenia by September.

The drugmaker, based in Basel, Switzerland, has been in a race with Merck KGaA to sell the first pill to delay progression of MS. The neurological disease affects 2.5 million people worldwide, many of whom have trouble sticking with current therapies because they’re difficult to use or have side effects, according to the National Multiple Sclerosis Society, a New York-based patient group. Current treatments are injectable drugs led by Biogen Idec Inc.’s Avonex, Merck KGaA’s Rebif and Teva Pharmaceutical Industries Ltd.’s Copaxone.

“This is an encouraging and important milestone for the MS community,” said Patricia O’Looney, vice president for biomedical research at the society, said in a statement issued by Novartis yesterday. “We believe that a treatment that reduces relapses and slows disability progression in a convenient oral formulation could encourage more people with MS to initiate treatment.”

Delay to Review

Novartis gained 1.65 Swiss francs, or 3.1 percent, to close at 55.5 francs in Zurich. The stock has risen 29 percent in the past 12 months. Merck fell 77 cents, or 1.3 percent, to close at 59.95 euros in Frankfurt.

“We view this as negative for Merck’s existing MS franchise, as we believe Rebif will likely lose market share,” Sam Fazeli, an analyst at Piper Jaffray & Co., wrote in a research note.

The review, initially set for six months, was delayed three months when Novartis said May 25 that the FDA requested additional analysis of current data.

The panel voted 20-5 in favor of a new study testing a 0.25 milligram Gilenia pill once a day, which the FDA suggested may be “much safer” than the 0.5 milligram proposed daily dose, which was linked to heart, lung and liver risks and infections in studies. The panel voted unanimously that the study can wait until after the drug is on the market. Novartis said testing a lower dose would take 2,000 patients and five to six years.

‘First-Choice Option’

“This strong endorsement sets the stage for Novartis to shake up the multiple sclerosis market, which is projected to grow to $15 billion by 2015,” Karl-Heinz Koch, an analyst at Helvea, wrote in a research note. He rates the stock a buy.

“We believe there is significant upside to our above consensus $1.4 billion peak sales forecast,” he wrote.

The FDA’s advisers also recommended that the first dose of the drug be taken under a doctor’s supervision to identify heart rhythm changes linked to starting treatment and suggested that additional testing may be needed to monitor potential eye and lung risks.

Les Funtleyder, a health-care strategist at Miller Tabak & Co. in New York, said before the meeting that he expected the drug to become a first-choice option for doctors, also called first-line therapy, with peak sales topping $1 billion a year.

“This will be used in first line eventually,” he said June 9 in a telephone interview. “It’s such a big advance to go to oral from injectable.”

Pill vs. Shot

Merck of Darmstadt, Germany, said this week that it had resubmitted its application to sell cladribine tablets as a treatment for MS. The FDA initially rejected Merck’s submission in November, saying it was incomplete.

Multiple sclerosis causes the body to attack nerve cells through the immune system. Gilenia and cladribine blunt the attack by targeting white blood cells that harm the protective coating of nerve cells. Cladribine was approved more than a decade ago to fight leukemia.

Mitsubishi Tanabe Pharma Corp. of Osaka sold rights to Gilenia to Novartis in 1997 and is helping the company develop the drug in Japan.

Biogen Idec said older treatments such as its Avonex and Tysabri shouldn’t be scrapped if Gilenia, chemically known as fingolimod, is cleared for sale.

“While there is a desire among the MS community for the convenience of an oral treatment, it is important for patients and physicians to consider efficacy, safety and long-term experience before choosing any therapy,” the Cambridge, Massachusetts-based company said yesterday in an e-mailed statement. “The safety profile of fingolimod has yet to be established in a larger number of patients in the real-world setting.”