Biogen faces multibillion-dollar Tecfidera loss if Mylan wins latest patent threat

Cash cow Tecfidera has been pumping out blockbuster sales as Biogen plows ahead with pricey Alzheimer's trials and scouts for new pipeline assets. But what if those sales took a big hit early next year, instead of eight years later?

That's the threat from a Mylan challenge at the U.S. Patent and Trademark Office, which just decided to put a 2028 Tecfidera patent under inter partes review. The Patent Trial and Appeals Board will hear arguments over the multiple sclerosis drug's '514 patent, with a decision due early next year.

Biogen's top drug by sales, Tecfidera brought in $4.27 billion last year. The company disclosed the patent review in its annual report Wednesday.

The '514 patent is "vital" to the Tecfidera franchise as its others expire this year and next year, Leerink analyst Geoffrey Porges wrote in a Wednesday note to investors. Biogen has fought off one previous IPR challenge on the drug.

If it loses this time, the hit to sales and market value would be significant. "In practical terms we estimate the maximum downside of a negative decision and accelerated generic entry (2020) is worth approximately 10-15% of Biogen’s value," Porges wrote.

Leerink previously estimated long-term Tecfidera sales by assuming some generic erosion starting in 2023 "and accelerating in 2028," the analyst said. A 2020 launch "would be material downside compared to our forecast and valuation."

But Evercore ISI analyst Umer Raffat believes Biogen can prevail in the latest case. The review centers on Biogen’s patent protecting 480-mg dosing, the analyst wrote; Mylan must demonstrate that it was "obvious" to test that dose in phase 3. 

A phase 2 test showed that a 720-mg dose worked, but that a 360-mg dose didn’t, Raffat points out. The "key issue" for the 2028 patent is whether the 360-mg dose was efficacious in those phase 2 results, he posits.

To argue the dose was efficacious, Mylan said the "baseline disease was higher" in the 360-mg arm, according to Raffat. The generic company argues "if you adjust for that and perform an ‘easy calculation,’" the 360-mg dose was efficacious, Raffat wrote, summarizing and questioning Mylan's argument.

In deciding to institute the review, the judge viewed the issue "in light most favorable" to the generic company, he pointed out. That won’t necessarily be the case in the actual review.

The development comes as Biogen looks to the future with neuroscience pipeline drugs, including several in Alzheimer’s disease that have delivered mixed results in clinical trials. The company has been tight-lipped about phase 3 trials in AD, despite analyst calls for word on an interim futility analysis that should be due any day, if not overdue by now. Meanwhile, Roche just last week stopped a trial of rival drug crenezumab after it failed an interim futility analysis.

Meanwhile, Biogen's 2017 spinal muscular atrophy launch Spinraza has taken off, generating $1.7 billion last year, but faces a potential new threat from Novartis’ gene therapy Zolgensma this year. The Novartis drug is designed to be a one-time treatment to cure a patient’s disease.

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