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Novartis' Multiple Sclerosis Drug Gilenia Poised for Approval

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A panel of experts voted in June to recommend approval of the drug despite some small safety concerns, and the FDA will likely follow the decision.

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On Tuesday, the landscape of the multiple sclerosis treatment sector is going to change dramatically -- at least in theory.

The FDA is set to make a decision on the approval of Novartis' (NVS) oral MS drug Gilenia by Tuesday, and in all likelihood, the drug will be approved. A panel of experts voted in June to recommend approval of the drug, despite some small safety concerns. While the FDA isn't required to follow the decisions of its panels, it often does (especially when the decision is unanimous).

Novartis is set to take a large chunk of the $11 billion multiple sclerosis market that already exists. (Analysts predict Gilenia could have sales of over $2 billion almost immediately, without any expansion to the current market.) If approved, Gilenia will be the first oral treatment for the disease that affects 2.5 million people worldwide. It will contend with injectibles from Biogen Idec (BIIB), Bayer, Merck KGaA, and Teva Pharmaceuticals (TEVA).

The one thing the Novartis drug has on its side is convenience. An oral drug would save MS patients a lot of unneeded pain and suffering caused by a daily injectible. Yet, convenience isn't enough. The drug has been proven to be more effective than a placebo, but has yet to prove itself to physicans against the tried and true treatments for the disease that are already on the market. This will be a big issue if the drug is to actually capture that $2 billion-worth of patients; it's likely that Gilenia will have a slow time penetrating the market as physicians see how effective it is compared with the injectible drugs already on the market -- like market leader Copaxone, made by Teva and Sanofi-Aventis (SNY).

Oppenheimer analysts expect that Copaxone will maintain its 40% market share and remarked in a recent investor note that Gilenia will likely be a second- or even third-line treatment as physicians assess possible side effects.

Novartis doesn't have long to put its mark on the oral MS market. The Swiss drugmaker has been battling with German pharmaceutical company Merck KGaA to get the first oral treatment to the masses and Merck isn't far behind.

In November, the FDA asked for more information from Merck KGaA regarding its MS pill cladribine. The German pharmaceutical company resubmitted the drug's application for approval with the FDA in early June. Both Gilenia and cladribine function in the same way to suppress immune system attacks on the body's own nervous system cells. If both drugs are approved, Gilenia would likely make it to market by the third quarter, while a priority review for Merck's drug would allow it to potentially come to market by the end of the year -- giving Gilenia only about three months to prove it's the superior treatment.

Novartis' challenge won't end there though. Multiple-sclerosis treatments have been notorious for setbacks after launch -- just ask Biogen Idec. The company produces two of the best-selling MS drugs, but one of its treatments, Tysabri, has been plagued by the fact that on occasion, it has caused a rare brain disease. Tysabri was considered one of the most effect treatments to date, but shortly after its launch the serious side effect became known. The company reported in August that there have been a total of 63 cases of the brain disease worldwide, including 12 fatalities. Due to this serious issue, sales of Tysabri have always been disappointing.

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