Biogen (NASDAQ: BIIB  ) decided to delay the European launch of its new oral multiple sclerosis drug Tecfidera back in May, amid fears that patent protection for its 480 mg dose wasn't bulletproof from generics. That decision has now paid off.

The EU's Committee for Medicinal Products for Human Use, or CHMP, has granted Tecfidera new active substance designation, giving Biogen a 10-year window of exclusivity in the European Union, and paving the way for Tecfidera's Q1 2014 launch against competing drugs from Novartis (NYSE: NVS  ) and Sanofi (NYSE: SNY  ) .

Rapidly growing demand

Biogen's calculated risk to delay the rollout in Europe until the additional patent protections were in place looks savvy in hindsight, especially given its booming initial sales in the United States. In Q3, the drug generated $286 million in sales for Biogen, far above the $200 million some analysts forecast.


The rapid script growth likely came at the expense of oral MS competitors Novartis Gilenya and Sanofi's Aubagio, which both had much slower sales ramps. Novartis and Sanofi are wrestling with safety concerns for their drugs, which have been associated with heart and liver complications. Those risks may have contributed to Tecfidera's early success in the United States: Its 13% market share beats that of Novartis and Sanofi's drugs combined.

Doctors' rapid adoption of Tecfidera could help the drug reach peak sales of nearly $4 billion more quickly than Wall Street predicts. Given that nearly a third of the drug's peak sales are expected to come out of Europe, the expansion of patent protection could mean billions in additional sales for the company over the next decade.

Plenty of running room

The MS market is ripe for oral alternatives to prior-generation blockbusters. Teva Pharmaceuticals' (NYSE: TEVA  ) Copaxone and Biogen's existing Avonex and Tysabri treatments generated roughly $8 billion in collective annual sales last year.

The appeal of oral alternatives has been eating into sales of those drugs since Novartis' Gilenya was introduced in 2010. Last quarter, Gilenya sales climbed 63% to $518 million -- a $2 billion annualized run rate.

Tecfidera may win additional market share next year, because $4 billion in annual sales will be up for grabs when Teva loses patent protection for Copaxone,  

Awaiting reimbursements

The EU's additional patent protection for Tecfidera helps clarify Biogen's future revenue by postponing the threat from generics. Tecfidera's rapid script growth in the U.S. suggests that the drug could see similarly strong launches in Europe.

That means investors should keep a close eye on reimbursement decisions in key markets like the United Kingdom, because those launches are likely to provide revenue and profit tailwinds for Biogen in 2014.
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Labels: Aubagio, Avonex, Gilenya, TECFIDERA, Tysabri