More MS news articles for Mar 2002

Serono's Rebif drug wins U.S. approval

Friday March 8, 5:21 pm Eastern Time
By Michael Shields

ZURICH, March 8 (Reuters) - Serono's multiple sclerosis drug Rebif has won approval for sale in the billion-dollar U.S. market, Europe's biggest biotech firm said on Friday, forecasting Rebif was set to be a blockbuster.

News that the Geneva-based company had successfully overturned U.S. "orphan drug" protection for Biogen Inc.'s (NasdaqNM:BGEN - news) rival Avonex drug sent Serono's stock soaring more than 17 percent to a six-month high of 1,537 Swiss francs.

It eased to 1,486 francs, while U.S.-based Biogen's shares fell 8.4 percent to $51.65 on the Nasdaq. Germany's Schering AG (quote from Yahoo! UK & Ireland: SCHG.F), which also makes MS drugs, dropped 2.84 percent.

Serono SA called the U.S. Food and Drug Administration decision an "important milestone," while Biogen said it was reviewing its 20 percent earnings growth estimates for 2003 as a battle for market share brewed in its own back yard.

It marked the first time the FDA had cited better treatment results rather than improved safety issues as a reason for voiding "orphan drug" protection, marketing exclusivity that is designed to encourage firms to develop costly medicines that treat relatively rare diseases.

"This is bad news for Biogen," said Alidad Mireskandari, portfolio manager at Oritex Health & Biotechnology Fund. "The fact that the FDA broke Avonex's orphan drug status implies that Rebif is a better drug."

Avonex's orphan drug status had been due to run out in May 2003.


The FDA green light followed a head-to-head clinical trial of the two drugs that Serono said showed Rebif was more effective. Biogen disputed the findings, sparking a bitter feud.

Chief Financial Officer Jacques Theurillat said Serono will launch Rebif in the key U.S. market within days and aims to capture more than a quarter of the market within four years.

He told Reuters in an interview that global sales of its fast-growing Rebif were seen topping $1 billion by 2005.

"The U.S. represents today a $1.3 billion market and our target is to reach over 25 percent of the market in three to four years' time," he said. "We estimate by the year 2005 we could be reaching over $1 billion sales in the world."

Rebif had sales of $380 million outside the U.S. last year, giving it a non-U.S. market share of 38 percent. Biogen has 60 percent of the U.S. market, where Avonex generated $711 million in sales last year, out of total Avonex sales of $972 million.


Theurillat said it was hard to forecast 2002 Rebif sales in the U.S., but cited analyst' estimates that they could be between $20 million and $80 million.

Serono is doubling its marketing expenses to around $60 million this year to support the U.S. launch of Rebif, Serono's No. 2 drug behind fertility treatment Gonal F.

U.S. sales will likely lag extra marketing spending this year, but Theurillat said sales should then accelerate quickly so that it wins more than a quarter market share in the U.S.


He said Rebif sales outside the United States were going "as expected" so far this year. Last month it forecast non-U.S. Rebif sales would grow 35 percent this year, helping to boost Serono's revenue and net profit at least 15 percent.

Serono invested $30 million in the fourth quarter of 2001 to prepare Rebif for launch in the lucrative U.S. market.

Serono said the FDA approval was for the relapsing form of multiple sclerosis -- the same indication it has in Europe.

Multiple sclerosis is a chronic inflammation of the central nervous system and affects around 350,000 people in the United States. The relapsing form of the disease is the most common type.

Before the news, Serono shares had fallen 9.5 percent this year and underperformed the Dow Jones Stoxx healthcare index by more than seven percent.

"It is a good marketing tool that the FDA has approved it, so I am quite sure they will make some inroads in the U.S. That is for sure," said Eric Bernhardt, who manages Clariden Bank's healthcare and biotech funds, both of which hold Serono shares.

"For new patients, Serono will be a formidable competitor to Biogen. On the other hand, if you have been taking Biogen's drug for 10 years and you are more or less happy with it, I am not sure somebody will change," he added.

While Avonex still has some competitive advantages, Biogen has a marketing battle on its hands that could drive Serono's shares even higher, Bernhardt said.

Zuercher Kantonalbank analyst Patrick Burgermeister said the approval came earlier than ZKB had expected. "This means they will have an extra quarter of sales, but I do not expect a very strong switch-over rate" into Rebif, he said.

ZKB had expected $30 million of U.S. sales for Rebif this year, but this could now be $45 million depending on how doctors prescribe the drug.

(Additional reporting by Paul Arnold, and Toni Clarke in New York)

Copyright © 2002 Yahoo! Inc