U.S. approval of Teva Pharmaceutical's migraine drug Ajovy on Friday removed a major uncertainty facing investors, spurring a 5% jump in the Israeli drugmaker's stock price when market trading resumed Monday.
Ajovy, a preventive treatment that targets a protein known as CGRP, is seen as a crucial driver of growth for Teva and a potential counterbalance to slumping sales of the company's top-selling multiple sclerosis medicine Copaxone.
But the expected boost from Ajovy may take some time to materialize. Rivals drugs from Amgen and Eli Lilly present a competitive challenge that market analysts expect will lead to aggressive rebating, cutting into near-term revenue prospects.
Leading up to Friday's approval, there was some doubt about whether Ajovy (fremanezumab) would pass muster with the Food and Drug Administration.
The agency had already delayed its decision on approval by three months, following manufacturing problems at the South Korean supplier of Ajovy's active pharmaceutical ingredient. Teva had expressed confidence the issues would not result in a further setback, but at least one Wall Street analyst had predicted the drugmaker would be met with further disappointment.
Ajvoy securing a clean label eliminates a key risk facing Teva's stock and bolsters investor confidence, which has been tested over the past two years.
"The FDA approval is a timely morale booster," wrote Rahael Maladwala, a pharmaceutical analyst at GlobalData, in a Sep. 17 note.
Anti-CGRP class shaping up to be competitive
|Drug||Company||Dosing||Est. 2020 US sales (millions)||Est. peak market share|
|Aimovig||Amgen, Novartis||Monthly via autoinjector||$917||38%|
|Ajovy||Teva||Monthly or quarterly via pre-filled syringe||$228||20%|
|galcanezumab||Eli Lilly||Monthly via autoinjector||$296||24%|
|eptinezumab||Alder||Quarterly via intravenous infusion||$46||19%|
SOURCE: Companies, Leerink estimates
Yet investors eagerly anticipating a fast launch could face a letdown, at least in the short term.
Amgen and Novartis have a head start of about four months with their rival CGRP inhibitor Aimovig (erenumab), which has seen strong prescription growth since launch. And Eli Lilly is hot on Teva's heels with its own anti-CGRP drug Emgality (galcanezumab). An OK from the FDA, expected in September, would put three drugs with roughly similar efficacy profiles in direct competition.
That could lead to aggressive rebating and marketing schemes that crimp revenues in the short term. Amgen and Novartis, for example, debuted Aimovig with an access program that offers patients two months of free drug samples.
Teva priced Ajovy at $6,900 per year, matching the lower-than-expected price-point of Aimovig.
"[W]e anticipate Teva may give greater discounts in order to strengthen their hand in negotiations for payer coverage," predicted Leerink analyst Geoffrey Porges in a Monday morning note to clients.
Previous research by Leerink indicated such discounting strategies could "undermine" reported revenues from the anti-CGRP drugs over the next one to two years.
Teva has indicated that it could consider a sampling program as well.
"I would think that all of the products will have either some kind of free product sampling program for a couple of months so that they can work through the insurance coverage issues," indicated Brendan O'Grady, Teva's head of commercial operations in North America, on a recent earnings call.
Ajovy also lacks an option for administering via an autoinjector, instead relying on a pre-filled syringe for delivery. That contrasts with Aimovig and Lilly's Emgality, potentially giving the two rivals an advantage in patient convenience.
"Our clinicians' experience is that the Aimovig autoinjector is incredibly easy to use, and even needle-phobic patients are willing to self-administer after the first visit," wrote Cowen analyst Ken Cacciatore in a Sep. 17 note to investors. "Although this seems like a minor differentiating feature, given the similarity in efficacy and tolerability, this could prove a meaningful competitive advantage for Amgen (and ultimately Lilly)."
Teva, though, believes Ajovy's monthly and quarterly dosing flexibility will be a differentiator that patients, especially active ones, will value.
In the long term, most analysts still expect Ajovy will reach blockbuster status. The size of the patient population, estimated to number in the millions in the U.S., suggests there's likely room for multiple competitors to bring in sizable revenues. Discussions with payers for 2019 and beyond, meanwhile, have yet to play out and could have significant bearing on which drug sees fastest uptake.
Investors, it seems, will have to be patient.
"We still see a major market expansion opportunity for competitive CGRP agents; nonetheless, Teva's Ajovy may lag due to lack of autoinjector and its profitability may be in question for some time," noted Jefferies analyst David Steinberg in a Monday note.