Generic Copaxone deal boosts Mylan, sinks Teva

NEW YORK (AP) _ Shares of Teva Pharmaceutical Industries Ltd. fell Tuesday after its blockbuster multiple sclerosis drug Copaxone faced the possibility of a generic rival from competitor Mylan Inc.

Teva shares fell $1.18, or 2.6 percent, to $43.58 in midday trading, while shares of its key rival in the generic drug sector, Pittsburgh-based Mylan, gained 33 cents, or 2.6 percent, to reach $12.97.

Early Tuesday, Mylan said it signed a deal with India-based NATCO Pharma Ltd. for worldwide distribution rights to that company's version of Copaxone. The deal gives Mylan rights in the United States, all major markets in Europe, Australia, New Zealand, Japan, and Canada.

Financial details were not disclosed, and Mylan declined comment on its plans for launching the drug, which is under patent protection until 2014 in the U.S.

Copaxone had worldwide sales of $1.7 billion in 2007, making up about 18 percent of Teva's $9.4 billion in revenue last year. Representatives for Israel-based Teva could not be immediately reached for comment.

While generic Copaxone remains a key financial opportunity for Mylan, the drug is likely years away from the U.S. and European markets, several analysts said. A key issue is the design of the drug, which involves different compounds and is highly difficult to replicate.

"Because Copaxone is not comprised of a single compound, but rather a mixture of polypeptides, the formulation is complex," said Cowen and Co. analyst Ken Cacciatore,in a note to investors. "Our consultants indicate that attempting to replicate a random formulation, due to the variability of the composition of the polymers, would be exceedingly difficult."

He noted U.S. and European regulators would likely want clinical studies on the generic Copaxone formulation and reaffirmed a "Outperform" rating for Teva. While NATCO is selling a version in India, regulatory hurdles are lower under that system when compared with the U.S. and Europe, Cacciatore said.

Meanwhile, Goldman Sachs analyst Randall Stanicky reaffirmed "Buy" ratings on both companies and said the announcement does not represent any real near-term threat to Teva. Mylan has to file an application and patent challenge with the Food and Drug Administration in order to gain marketing approval, and that has not happened, he added.

If Mylan did ask for approval, Teva would likely sue under patent infringement, evoking a 30-month stay on any plans Mylan has to market the drug while the dispute goes through the courts.

Meanwhile, Teva is developing a 40-milligram version of the drug, which is now approved for 20 milligrams. If approved, Teva would gain patent protection on the new, stronger dose.