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U.S. regulators rejected a lower-volume version of Teva Pharmaceutical Industries' Copaxone multiple sclerosis treatment yesterday, but the drugmaker's shares rose 3% on the Nasdaq in New York as analysts said the decision could delay generic competition.

The U.S. Food and Drug Administration's rejection suggests that rivals may encounter obstacles in winning approval for generic versions of Copaxone, Teva's biggest product, analysts said yesterday. The potential for a generic Copaxone is a major issue weighing on shares of the Israel-based drugmaker.

"The FDA's letter highlighted the high hurdle potential generic manufacturers of Copaxone face in gaining approval," JPMorgan analyst Chris Schott said. "Today's news, in our view, increases the probability of clinical data requirements for generic Copaxone manufacturers."

Teva is the world's largest generic drugmaker, but it is heavily reliant on its branded Copaxone, which had $2.8 billion in sales last year and is administered by injection. Although the new version contains the same amount of active ingredient as the product on the market, the FDA said it was not entirely clear how the drug worked or how changing it could affect patients' treatment, according to Teva.

Unless Teva can prove there is no effect on how well the drug works, it would need to conduct "an adequate and well-controlled" study to prove its effectiveness, the FDA said, according to the drugmaker.

The FDA's response supports the company's belief that even slight changes to a drug like Copaxone "can significantly and unpredictably influence the efficacy, toxicity and immunogenicity profile of the compound," Teva said.

Teva has long maintained that Copaxone is a difficult product to replicate and has said that any potential generic version should be evaluated with full-scale clinical trials.