Teva Pharmaceutical Industries Ltd's experimental multiple sclerosis pill Laquinimod reduced the disease's relapse rate less than hoped in a pivotal trial, weighing on the company's shares.
But the medicine could still win a place in a competitive market based on its ability to cut patients' disability and its relatively kind side effect profile.
Laquinimod is jockeying for position in the emerging area of oral treatments for multiple sclerosis (MS), where Novartis' recently approved Gilenya has a clear lead.
Last week, the company announced a 23% annualized relapse rates (ARR) over placebo in a late-stage study overnight.
"The market expected closer to 25% or a bit above," said Jonathan Kreizman, an analyst at brokerage Clal Finance.
Other analysts said the results from the Phase III study suggested Gilenya, which showed a reduction in relapse rates of 54%, would remain the oral MS treatment of choice.
The data for Laquinimod was not all bad, however. The drug reduced disability progression – as measured by the expanded disability status scale (EDSS) – by 36%, which compared favorably with Gilenya.
Kreizman said the EDSS figure was in line with market expectations of 30-40% and ahead of Gilenya.
Dan Bar-Zohar, Teva's global medical director, said he was "very happy" with the overall results.
"We are talking about a whole package that consists of safety, efficacy on the inflammatory part of the disease, robust efficacy on the degenerative part, which is disability, and the convenience of the drug, a once-daily pill," he told Reuters.
"The typical patient is a 30-something-year-old female and what's most important for her is when will she be in a wheelchair. Laquinimod is one of the most effective drugs in delaying the accumulation of physical disability."
Teva's medicine – which Bar-Zohar expects to win approval during the second half of 2012 and be launched at the end of 2012 – also had an impressive safety profile in the study.
Safety data
"If Laquinimod's safety data is as benign as the initial data suggests... and further data supports a robust effect on disease disability, then Laquinimod could play a meaningful role as a safe non-immunosuppressive treatment for early-stage MS," said Richard Parkes of Deutsche Bank.
Still, Parkes said he did not expect the new drug to derail sales forecasts for more potent treatments like Gilenya and Tysabri, an injectable therapy from Biogen Idec and Elan .
The Laquinimod data had been due to be released later this week at the American Academy of Neurology meeting in Honolulu, Hawaii, but was published early due to an embargo break.
Other emerging competitors in the oral MS space include Sanofi-Aventis and Biogen, which reported recently that its drug BG-12 met the main goal in the first of two important late-stage studies.
Industry analysts' forecasts for Laquinimod sales vary widely, given the uncertainties about the competitive landscape.
Kreizman said he expected sales of $750 million (461 million pounds) to $1 billion a year, while independent forecaster BioMedTracker has predicted the drug will sell some $600 million by 2015 and peak at $1.3 billion in 2019.
Israel -basedTeva is best known as the world's largest maker of generic drugs, but it also has a leading position in MS with its branded injectable drug Copaxone.
Copaxone now faces the threat of generic competition and Laquinimod is viewed as important in protecting Teva's MS franchise.