MKGAF Merck KGAA (PK)

Sanofi’s (SNY) subsidiary, Genzyme, recently announced encouraging top-line results on its phase III candidate, Aubagio (teriflunomide). Results were presented from the phase III TOWER trial, which was conducted on 1,169 patients with relapsing forms of multiple sclerosis (RMS). Full results from the trial are being analyzed and will be presented at an upcoming scientific meeting.

The TOWER pivotal phase III trial evaluated Aubagio in two dosage strengths, 7mg and 14mg. Patients in the 14mg dosage Aubagio arm demonstrated a 36.3% reduction in annualized relapse rate compared to placebo. The reduction was statistically significant. Additionally, a 31.5% reduction in the risk of 12-week sustained accumulation of disability was also observed.

Meanwhile, patients in the 7mg dosage Aubagio arm demonstrated a 22.3% reduction in annualized relapse rate compared to placebo. However, the reduction in the risk of 12-week sustained accumulation of disability was not statistically significant.

TOWER is the third completed study evaluating the efficacy of Aubagio in RMS patients. In October 2010, Sanofi had announced positive results on Aubagio from a pivotal phase III study (TEMSO) in patients with RMS. However, Aubagio failed to show statistical superiority over Pfizer/Merck KGaA’s (PFE/MKGAF) Rebif in the TENERE trial, reported in December 2011. There are two more studies in progress, namely TOPIC and TERACLES, which makes the program one of the largest and broadest amongst any oral multiple sclerosis programs under development.

Sanofi filed for US approval of Aubagio in August 2011 and EU approval in February 2012.

Our Take

Competition in the oral multiple sclerosis (MS) market will be intense and Aubagio needs to demonstrate superior efficacy and tolerability to gain share. Novartis’ (NVS) Gilenya already has a lead in the oral MS market with the product being approved in September 2010. Another major competitor could be Biogen Idec’s (BIIB) BG-12, which is currently under regulatory review in both the US and the EU.

We currently have a Neutral recommendation on Sanofi. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

 
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