How Celgene Could Win Big On A Patent Victory For Rival Novartis


Biotech giant Celgene (CELG) could win big after U.S. patent officials shut down a challenge facing Novartis‘ (NVS) multiple sclerosis drug Gilenya, analysts said Thursday.

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On Wednesday, an appeals board of the U.S. Patent and Trademark Office upheld a patent protecting Novartis’ Gilenya until December 2027. This extends Gilenya’s exclusivity well past a prior August 2019 expiration date, RBC Capital Markets analyst Brian Abrahams said.

While undoubtedly a win for Novartis, the decision also has implications for fellow multiple sclerosis drugmakers Celgene and Biogen (BIIB), he said in a report. Celgene recently suffered a delay for its multiple sclerosis drug, ozanimod.

This gives Celgene more time to get approval for ozanimod — which is currently hamstrung by questions from the Food and Drug Administration — before a generic Gilenya comes out and begins to take share, he said.

“For Celgene, this should provide a better ozanimod launch runway especially after their (new drug application) filing delay, and give Biogen less medium-term price/share compression risk for its MS franchise, particularly for (its drug called) Tecfidera,” he said.

In midday trading on the stock market today, Celgene jumped 2.1%, near 85.10. Novartis advanced 3.4%, near 79. Biogen rose a fraction, near 345.30.

Rivalries In Multiple Sclerosis

Generic competition in multiple sclerosis is already underway. In October, Mylan (MYL) gained approval for a generic version of Teva Pharmaceutical‘s (TEVA) multiple sclerosis drug, Copaxone. In the first quarter, Teva said its U.S. sales of Copaxone declined 40% year over year.

The same could happen for Novartis’ Gilenya if generics arrive. Despite the patent appeals board decision, generic rivals will likely appeal, Evercore analyst Umer Raffat said. Gilenya could still lose patent protection at some point in 2022-24 depending on appeals.

“In summary, ozanimod will no longer be launching vs. a generic Gilenya in 2019,” he said in a report to clients. “This gives ozanimod at least a three-year window to launch in a branded market and establish presence in MS.”

RBC’s Abrahams noted Celgene could benefit to the tune of $200 million in upside depending on the length of the delay for generic Gilenya.

Can Ozanimod Differentiate Itself?

Ozanimod is meant to be a safer version of Gilenya. Both belong to a class of drugs called sphingosine 1-phosphate receptor modulator, or S1P modulators. Gilenya is tied to heart rate and liver issues. Patients must be monitored after their first dose.

“The attribute neurologists care most about in a next-generation S1P therapy is the absence of first-dose monitoring,” Piper Jaffray analyst Christopher Raymond said. “They also rank an advantage on liver enzyme impact pretty far down the list of comparative advantages they’re looking for in an S1P vs. Gilenya.”

It’s not clear whether ozanimod will have a similar requirement. But Celgene management indicates “the going assumption is that ozanimod won’t avoid it,” Raymond said in his note to clients.

“As we see it, unless ozanimod can avoid first-dose monitoring, Celgene faces an uphill battle in its efforts to differentiate the molecule,” he said.

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