After Delays, Teva Wins Approval From U.S. for Migraine Treatment

Beleaguered Israeli drug company banking on Ajovy to boost sales, profits and offset the decline of its Copaxone MS treatment

Bottles of Teva Pharmaceutical Industries Ltd. Clonazepam and Diazepam medication sit on a pharmacy shelf in Provo, Utah, U.S., on Wednesday, Aug. 31, 2016. A
Bloomberg

Shares of Israel’s Teva Pharmaceuticals soared Sunday after the U.S. Food and Drug Administration approved the company’s migraine treatment, which the company is counting on to lead a turnaround after three difficult years.

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The celebration was especially strong as the FDA’s approval for Teva’s Ajovy drug had been delayed for months over regulatory concerns about the manufacturing process at the South Korean plant of its development partner Celltrion.

Teva shares, which rallied in after-hours trading in New York after the FDA announced its approval, closed up 8.75% on the Tel Aviv Stock Exchange Sunday at 87.27 shekels ($24.38).

Among Teva’s many woes, its best-selling Copaxone multiple sclerosis treatment has seen sales decline as the first generic competition began last year. Ajovy, which analysts at Deutsche Bank have said could reach sales of $500 million annually, would go a long way to filling the loss of Copaxone.

It also marks an important achievement for Kare Schultz, the Danish CEO brought in nearly a year ago with the task of cutting Teva’s costs, which he has done, and finding new revenue generators.

Ajovy, whose generic name is fremanezumab, was supposed to have been approved by last June. Although Teva had sought to ensure investors that Ajovy would be approved this month, many remained skeptical after the initial delay.

“Hitting this target is very important validation for management’s credibility,” Evercore ISI analyst Umer Raffat wrote in an emailed note to clients.

Around 39 million Americans suffer from migraines, according to the Migraine Research Foundation, making for a large market. But those numbers have attracted several drugmakers and Teva faces a highly competitive market.

Aimovig, another migraine treatment marketed by Amgen and Novartis, has been available in the United States since May, giving it a leg up on Teva. Meanwhile, Eli Lilly and Co. is also developing a migraine treatment in the same new class of drugs, with the FDA expected to take action by September 27.

Ajovy’s advantage is that it need only be administered once every three months — in three consecutive injections — while Aimovig needs to be given monthly.

As to pricing, Teva said the wholesale price would be $575 a month, the same as Aimovig. “We felt that $575 was an appropriate price,” Brendan O’Grady, head of Teva’s North America commercial operations, told Reuters.

He said Teva has been actively negotiating with health insurers and other payers for months on how best to allow patient access to the new drug. Ajovy will initially be available in a prefilled syringe rather than the more sophisticated auto-injector device Aimovig uses.

Teva, which is the world’s biggest maker of generic pharmaceuticals but also has a portfolio of proprietary drugs, has sought approval for Ajovy from the European Medicines Agency and hopes to launch sales in the European Union in the first half of 2019.

Demand for Aimovig has been strong, buoyed by aggressive marketing by Amgen that will make it harder for Teva to win users.

The wholesale price the drug was launched at was less than analysts had been expecting and the company is offering patients two months of free samples followed by up to a year’s supply of the drug for those having trouble with insurance coverage.

Teva said it would offer an assistance program for commercially insured patients, bringing their out-of-pocket costs to as little as $0.

Teva’s financial woes are largely the result of its misguided $40.5 billion purchase of Allergan’s generic drug business in 2016, which left it saddled with huge debt and portfolio of generic drugs at a time when prices for generics was falling. Ironically, Ajovy was a drug under development at a tiny company called Labrys, which Teva bought for just $200 million and another $625 million in potential milestone payments.

In addition to the migraine drug, Teva is banking on Austedo, an experimental Huntington’s disease treatment, to help it return to growth.