Before the markets opened Monday, Biogen Idec announced the FDA has extended its regulatory review for Plegridy by three months. A regulatory action date during the second half of 2014 is now anticipated.
The same type of regulatory delay occurred with Tecfidera in early 2013 and with Gilenya in mid- 2010, and the drugs were still approved. Biogen Idec said the FDA has not asked the company to conduct any new trials, and no specific areas of concern have emerged during the regulatory review. Lastly, the manufacturing of Plegridy for the Phase III trial is the same as the manufacturing Biogen Idec plans to launch Plegridy with, therefore alleviating manufacturing concerns. Despite this setback, we continue to believe Plegridy will receive regulatory approval from the FDA, now in the second half of 2014.
Plegridy’s regulatory application in Europe is unaffected by Tuesday’s news, and we anticipate a mid-2014 approval. In both the United States and Europe, we believe the commercial launches will be conservative given the increasing competition in multiple sclerosis (where nine therapies are currently on the market) and that recent improvements in treating multiple sclerosis suggest patients relapse less frequently and therefore need to switch therapies less frequently. Our sales estimates for Plegridy are $15 million in 2014, $215 million in 2015, and $463 million in 2016.
We believe the roughly $15 billion multiple sclerosis market will continue undergoing segmentation into three groups (injectables, high efficacy, and orals), and Biogen Idec is well positioned to manage this transition given its breadth of approved therapies (Avonex, Tysabri, and Tecfidera). The regulatory approval of Plegridy has the potential to bolster Biogen Idec’s already strong position because it provides an additional therapeutic option Biogen Idec can lever to cater to the personalized needs of the broad range of multiple sclerosis patients.
This is due to Plegridy’s pegylation technology, which enables the compound to be administered only once or twice monthly rather than once weekly. Existing injectable drugs in the same class as Plegridy are dosed daily or weekly, giving Plegridy an advantage in terms of convenience. We also believe new compounds like Plegridy often the potential for high-dollar margin growth because Biogen Idec already has a well-established presence and global commercial organization in multiple sclerosis. In our view, layering in compounds like Plegridy to the established commercial infrastructure should drive operating margin expansion, thereby accelerating EPS growth.
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