Teva’s Hedge on Complex Generics

Who says you can’t have your cake and eat it too?

When it comes to the follow-on biologics space, there are plenty of companies who are likely to try. As we’ve written before, the looming new pathway for abbreviated approval of biosimilars opens up opportunities for lots of companies—brand, generic and biotech—to consider whether to play as a true “follow-on” supplier, focus on improved “biobetters,” or do both.

But no one is in quite the same position as Teva. Not only is the company doing that analysis for the longer term biosimilar opportunity (you can read more about its latest thinking in “The Pink Sheet” DAILY here), but it is on both sides of the issue for two near-term decisions on complex molecules that are regulated as drugs.

Teva is one of three companies (along with Momenta and Amphastar) with pending applications to market a generic version of Sanofi Aventis’ enoxaparin (Lovenox). In that case, Teva wants FDA to agree that, while enoxaparin is a relatively complex molecule, it is not too complex to allow for a fully substitutable generic approval.

On the other hand, Teva’s largest and most important product is the branded multiple sclerosis therapy glatimir (Copaxone). There are two would-be generics pending, Momenta’s and Mylan's.

In that case, Teva is arguing that Copaxone is far too complex a molecule to be copied closely enough to allow for substitutability—and is even suggesting that other manufacturers may have trouble even getting a non-interchangeable product approved without full clinical studies.

Teva, of course, is aware that this may sound like trying to have your cake and eat it too. But they don’t see a contradiction. Here is how Teva CEO Bill Marth put it during the Goldman Sachs CEO “unplugged” conference Jan. 6:

“When you think about Copaxone, many people try to equate it to Lovenox. It is
much, much different—vastly more complex—than Lovenox will ever be. We have not characterized it. We don't believe it can be fully characterized.

If one cannot fully characterize Copaxone, I'm not sure how you get it approved without a clinical study since the method of action is not well understood and exactly what the active sequence is. And, by the way, we think there are multiple methods of action, and potentially multiple reasons for that. We think that it is virtually impossible to prove your efficacy without a clinical study. So it really falls into more of that sweet spot of the biologics....

I think it is much different with Lovenox than it is with Copaxone because with Lovenox, the active sequence has been identified by us. It hs been identified by the
innovators. It has been identified of course by Momenta and Amphistar.

So it is defined. It is a sugar. When you look at those sugars and you look at the active sequence, then what you really have to do is understand what is the other stuff or junk that is within your protein or sugar, and there make sure that you don't have improper immunogenicity. They have asked us for immunogenicity testing. We have done that. And it seems to be acceptable so far.”

In other words, Teva thinks it can kept its Copaxone cake and take a huge slice of Sanofi-Aventis’ Lovenox cake too.

But there are other outcomes. From Teva’s perspective, an outright rejection of substitutable Lovenox wouldn’t be so bad, since it would underscore the company’s position that substitutable Copaxone is a pipe dream.

And while Teva would dearly love to tap into the $2 billion Lovenox market, at best it will only get a percentage of a big generic opportunity. With Copaxone, Teva hopes to maintain its own multi-billion dollar brand in something like perpetuity.

How important is that to the company? During its January 7 investor day, Teva’s bullish forecasts for growth for 2015 included what the company called a “conservative” forecast for Copaxone, with sales peaking at $3 billion and then eroding over time to $2 billion in 2015. But the erosion, in Teva’s view, will come only in the face of competition from other MS agents (including Teva’s own oral product)—not from any substitutable generic competition.

So call it a hedge: if generic Lovenox is rejected, Teva’s Copaxone franchise is more secure. If Copaxone can’t be protected, at least Teva will have some generic enoxaparin revenues to fill in the hole.

There’s really only one scenario where Teva loses. If one of the other applicants (Momenta being the most likely candidate) actually has superior technology, it could potentially get approval for generic Lovenox and generic Copaxone, while no one else can.

For Teva, that would be more like a pie in the face.