A Tecfidera Comeback? Investors Await More On Patent Plans From Biogen
Executive Summary
Biogen has been granted new US patents for Tecfidera after generics already launched. It's unclear how Biogen will proceed but management could shed more light on the matter during the first quarter call.
The loss of Biogen, Inc.'s blockbuster multiple sclerosis pill Tecfidera (dimethyl fumarate) to generics in the US was a big blow to the company in 2020, but in an unexpected development, Biogen has been issued new patents – raising questions about whether there could be a renewed commercial opportunity for the brand.
Blocking generics from the market nearly a year after they launched would certainly be an unusual turn of events and it's unclear if Biogen will proceed with filing new patent infringement lawsuits. It is not unprecedented, however, for generic drugs launched "at-risk" – before a final legal ruling – to be withdrawn from the market following a subsequent court ruling, as has been the case in some rare but high-profile generic disputes. In one instance, Allergan plc was ordered to stop selling generic versions of Endo International plc's Opana ER (oxymorphone HC extended release) four years after launching the generics due to patent infringement. (Also see "Actavis Must Withdraw Opana ER Generic Four Years After Launch" - Pink Sheet, 17 Aug, 2015.). Endo had already stopped producing the crush-resistant pain killer but continued to pursue patent infringement because the generic hurt uptake of a newer crush-resistant product.
Biogen declined to comment on next steps on the intellectual property front, noting only in a statement, "It is typical for biopharmaceutical companies to seek to protect their innovation through patents. We cannot comment further on IP matters."
Private attorneys not associated with Biogen said it certainly appears that the company could have grounds to file for patent infringement, presenting some new risk to generics.
"It is certainly an unusual situation. Brand companies are often continually getting new patents, but generally all of that happens within the context of the original patent case," said patent attorney Chad Landmon, a partner at Axinn, Veltrop & Harkrider. "It is unique to have the patent issue after generics have gone to market already."
Biogen's first quarter earnings call on 22 April could be an opportunity for investors to hear more from management about the near-term outlook for Tecfidera, even as investors remain keenly focused on the upcoming action date on aducanumab for Alzheimer's disease in June. Sales of Tecfidera declined to $607m in 2020 from $1.16bn in 2019 after Mylan Pharmaceuticals Inc. launched the first generic version at-risk in August, followed by broader multi-source competition later in the year. (Also see "Tecfidera Headwinds Could Mean Cuts At Biogen, Unless Aducanumab Succeeds" - Scrip, 21 Oct, 2020.)
Another consideration is Biogen's federal appeals court case against Mylan; a decision in the patent litigation is expected in the near-term, though investors have had low expectations the outcome would be in Biogen's favor following the lower court ruling. (Also see "Mylan Presses On With US Tecfidera Launch ‘At Risk’" - Scrip, 19 Aug, 2020.) If the appeals court rules in favor of Biogen, however, that would establish a stronger foundation for patent infringement.
If Biogen were able to recoup some financial losses from Tecfidera – either by blocking generics or seeking monetary damages – it would be an unexpected stop gap for Biogen, which is lacking near-term growth drivers outside of aducanumab. Removing generics from the market would provide a longer bridge for the company to try to switch patients to a newer fumarate product, Vumerity (diroximel fumarate), which has been off to a slow start.
"Having the newer product in their portfolio is more incentive for them to seek the injunction as well, not just damages," Landmon pointed out.
New Patents Relate To Safety
One of the three new patents was issued on 30 March, patent number 10,959,972, which relates to the methods of treating multiple sclerosis with a fumarate and particularly methods to "improve the safety of treatment by informing and monitoring patients undergoing treatment regarding progressive multifocal leukoencephalopathy and/or by monitoring lymphocyte count."
Labeling for Tecfidera warns of the potential for decreased lymphocyte counts and recommends monitoring. Complete blood count monitoring (CBC) is recommended before starting treatment, at six months and annually thereafter. All three of the new patents relate to the same safety issue and extend until 2035, according to analysts who reviewed the patents.
"The patent office has recently allowed three Tecfidera-related patent applications," Morgan Stanley analyst Matthew Harrison said in a 25 March research note. "While we think they could help Biogen get monetary damages from generic at-risk launches and even get those generics off the market, there are potential limitations in the patents that will need to be litigated first."
Harrison said he expected Biogen would file lawsuits against generic drug makers, possibly including a motion for preliminary injunction to try to get generics off the market.
"Based on our initial analysis, it would be an uphill battle to get an injunction at the start of the litigation," he said. "If Biogen does not file such a motion then, we may not get clarity from the litigation for a couple of years."
In the case of Sanofi and Bristol Myers Squibb Company's case against Apotex relating to the at-risk generic launch of Plavix, for example, a judge awarded the drug makers $442m in damages plus costs in 2010, four years after Apotex Inc. launched generic versions of the drug for a three-week period in 2006. (Also see "Apotex To Retain About $300 Million From Its At-Risk Launch of Generic Plavix" - Pink Sheet, 20 Oct, 2010.)
Evercore ISI analyst Umer Raffat was skeptical that Biogen's new patents will lead to any material changes. "Getting an injunction against generics [is] nearly impossible at this stage," he said in an email to investors. "These patents are being issued well after ANDA filings have occurred – this has direct ramifications for the odds of injunction."
Jefferies analyst Michael Yee agreed in a 25 March note that an injunction might be unlikely. "It might just get tied up in more litigation that could take years to resolve, and an injunction at this point with generics flooding the market may be unlikely versus perhaps just monetary damages owed back," he said.
"While the return of Tecfidera would be a significant boost to both the near-term performance of the company – and the stock – we caution it remains early, with much left to play out," Bank of America analyst Geoffrey Meacham said in a 25 March note.
Investor Attention Has Already Turned
While prolonged revenues from Tecfidera or monetary damages would be a help to Biogen in the near-term, the multiple sclerosis market is increasingly competitive and the long-term growth outlook for the maturing franchise was already diminishing regardless of generics.
The focus of investors has turned to new growth opportunities – most notably aducanumab. Investors are eagerly awaiting news from the US Food and Drug Administration about whether or not aducanumab will be the first disease-modifying drug to reach the market for Alzheimer's disease or if the application will be rebuffed by the agency. (Also see "Aducanumab Approval Decision Delayed: Could This Be Good News?" - Scrip, 29 Jan, 2021.)
Updates on aducanumab are largely in a wait-and-see holding pattern until the FDA makes a decision on the application; the action date is 7 June. Other newer late-stage opportunities are two drugs for psychiatric disorders stemming from a development and commercialization deal with Sage – zuranolone in depression and SAGE-324 in essential tremor. (Also see "Biogen And Sage On Plans To Build A Brain Franchise Together" - Scrip, 30 Nov, 2020.) The companies recently reported positive top-line Phase II data on SAGE-324 in essential tremor and said they planned to move forward with its development.