Israel's Teva Sees Sharp Rise in Revenue Next Year Boosted by New Migraine Drug

Israeli drug maker reports better-than-expected quarterly rules, but shares post a drop anyhow

Teva CEO, Kare Schultz, speaks in Tel Aviv, Israel, February 19, 2019.
Ofer Vaknin

Teva Pharmaceuticals forecast Thursday a sharp rise in revenue next year from its new migraine drug Ajovy as it reported a slightly smaller-than-expected drop in first-quarter profit.

The world’s largest generic drugmaker is counting on Ajovy and Huntington’s treatment Austedo to help revive its fortunes after restructuring to tackle a debt crisis.

Sales from its blockbuster multiple sclerosis drug Copaxone have been declining in the face of generic competition, which is also hurting sales of respiratory drug ProAir. Teva has reduced spending by $2.5 billion since initiating the restructuring last year.

CEO Kare Schultz said the company is on track to cut $3 billion in spending by the end of this year while continuing to lower debt. Teva has already cut its workforce by 10,400 and Schultz expects to cut several thousand more jobs this year.

“Our focus is on stabilizing our global generics business and ensuring the success of our long-term organic growth drivers, especially Ajovy and Austedo,” Schultz said.

Nevertheless, Teva shares fell. In New York, they were down 2.2% to $14.90 midafternoon local time Thursday.

Austedo’s sales more than doubled to $74 million and are expected to reach $350 million for the full year.

Launched in September, Ajovy had U.S. sales of $20 million in the first quarter. The drug to prevent migraines is on track to meet the company’s 2019 target of $150 million and substantially more in 2020, Schultz said.

Eli Lilly and Amgen also began selling similar new migraine treatments last year, creating fierce early competition and allowing insurers and pharmacy benefit mangers to demand steep discounts to cover them in the United States.

Lilly, which reported results Tuesday, said its migraine drug Emgality had sales of about $14 million, half of what analysts were expecting, with revenue limited by a program that allows patients to try newer drugs at little or no cost.

First-quarter sales of Amgen’s market leader Aimovig were also well short of expectations at $59 million compared with $83.3 million projected by analysts.

Its strategy is to make the drug available to all patients with a prescription regardless of their insurance, Schultz said. Teva then negotiates with the insurer to obtain payment.

Amgen said 200,000 U.S. patients have been prescribed Aimovig, with about half of prescriptions being filled free.

About 36,000 patients receive Ajovy, which is winning about 30% of all new prescriptions. “I still think we will get 25 to 30% of the market,” Schultz told Reuters.

Teva said it expects its generic version of Mylan’s life-saving EpiPen emergency allergy treatment to have around a 20% market share by the end of the second quarter and could approach 50% by the end of the year.

Teva’s generic EpiPen has accounted for only a small portion of the drug’s market since its launch last year. It had around 6% of the market as of April 19, according to a research note from Leerink citing IQVIA data on prescription volume.

Teva said it earned 60 cents per share excluding one-off items in the first quarter, down from 94 cents a year earlier. Revenue fell 15% to $4.3 billion.

Analysts had forecast earnings of 58 cents a share on revenue of $4.38 billion, according to IBES data from Refinitiv.

Teva’s generics business is stabilizing after steep declines in the past few years.

“We now have five quarters in a row where the North American generics business is around $1 billion in revenue per quarter, and where European revenue is around $900 million,” Schultz said.

Teva reaffirmed its 2019 forecast for adjusted earnings per share of $2.20 to $2.50 on revenue of $17 billion to $17.4 billion. Analysts are forecasting EPS of $2.40 on revenue of $17.29 billion.