Shares of Cambridge, Massachusetts-based Biogen rose 2.6% to $305.25 in early trade.
Biogen said it would make the new drug, Vumerity, available in the United States in the near future but declined to provide a list price for the treatment.
Biogen has doubled down on efforts to bring a treatment for Alzheimer’s to the market as its top-selling drug Tecfidera, also a multiple sclerosis treatment, faces patent challenges and increased competition from newer treatments such as Roche AG’s Ocrevus.
Earlier this month, the company and its partner Eisai Co surprised investors by announcing plans to bring back Alzheimer’s drug aducanumab, which they had shelved in March.
Wednesday’s approval of Vumerity could help Biogen incrementally but is unlikely to save Tecfidera from patent challenges, analysts said.
Biogen has fiercely defended Tecfidera’s market exclusivity and has in the past sued over a dozen drugmakers in a bid to block generic versions of the drug that brought it sales of $4.27 billion last year.
“Nobody’s expecting Vumerity to be like Tecfidera 2.0,” Mizuho Securities analyst Salim Syed said.
“This is going to be used in a small subset of the Tecfidera patients who have gastro issues.”
Syed, who expects Vumerity to bring in sales of $500 million at its peak, added that people should not assume Biogen will be able to roll over all Tecfidera patients to Vumerity.
Vumerity was approved to treat relapsing forms of multiple sclerosis, a disabling autoimmune disease that damages the central nervous system and can lead to fatigue, pain, vision loss and impaired coordination and motor skills.
The drug’s approval was based on data comparing Vumerity and Tecfidera, Biogen and partner Alkermes Plc said in a statement.
Under the terms of a license agreement between the two companies, Biogen will pay Alkermes $150 million and royalties from the worldwide commercial sales of the drug.
Reporting by Tamara Mathias and Trisha Roy in Bengaluru; Editing by Supriya Kurane
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