Cowen Questions Sales Growth Of Biogen Idec’s MS Drug Tecfidera

Yesterday, Biogen Idec (BIIB) was the worst performer amongst the larger pharmaceutical companies after Cowen analyst Eric Schmidt pointed that the IMS prescription sales data for new prescriptions (NRx) of the company’s recently launched multiple sclerosis / MS drug Tecfidera (dimethyl fumarate) may be flawed due to double counting of patients were prescribed a new dose of the drug. After Biogen launched the drug earlier in the year at a price of $54,900 per year, Wall Street began to create a correlation between the drug’s performance and the price of BIIB common stock.

This can explain the sensitivity that BIIB shares had to Cowen’s bearish note on Tecfidera and the delay of the European launch into the second half of 2013.

There has been some skepticism over the drug because of the cheap manufacturing cost of the easily-available NF-κB inhibitor dimethyl fumarate (the active ingredient of Tecfidera) although Biogen was indeed the first to clinically develop the compound for the relapsed MS indication, and can justify a price premium for its branded drug. Now it seems that the patent protection of Tecfidera is causing the drug some serious issues in Europe, which explains why the company would delay its introduction into Europe.

AVONEX® (interferon beta-1a), TYSABRI® (natalizumab), and RITUXAN® (rituximab) are Biogen’s other primary drugs in the MS indication. These three brought in the vast majority of the company’s $1.4 B in quarterly revenues ($736 million, $275 million, and $288 million respectively), which represents what should be the lion’s share of the ~$10-15 B US MS drug market. The three drugs also saw in 13%, 9%, and 7% year-over-year growth respectively.

Despite the strength of Biogen’s existing pipeline, expectations are very high for Tecfidera, and it’s generally agreed that the drug will have to pull more than its own weight in order for the company to meet its 2013 sales growth forecast of 16-18%, particularly since none of the company’s existing drugs are growing sales at that rate. Expect the market to continue to monitor Tecfidera’s performance very closely, and to punish BIIB further in the event that Cowen’s theory on the prescription sales is correct.