"In clinical trials Gilenya has been linked to a range of worrying side effects, including skin cancer, heart problems and infections."
Swiss drugmaker Novartis AG's race to get the first multiple sclerosis pill to market reaches a pivotal point next week when U.S. experts vote on whether Gilenya should be recommended for approval.
A green light is far from assured. Although the new drug has outperformed current injectable medicines in trials, it is associated with a range of potentially serious side effects that could limit its use or block it from the market altogether.
Industry analysts at Citigroup think the safety issues on Gilenya are a "50/50 call" and the market generally is cautious, suggesting scope for significant share price moves depending on the outcome of the June 10 advisory meeting.
Novartis officials, however, are hopeful the experts will see a positive risk-reward balance for the medicine, especially now that a lower dose is being used, which has reduced the frequency of side effects.
If it is successful, Gilenya -- which Novartis licensed from Mitsubishi Tanabe Pharma Corp (4508.T) -- could win a sizable chunk of existing multiple sclerosis (MS) drug sales, totalling some $10 billion a year, and expand the overall market.
With its potential to help Novartis overcome patent losses on older drugs, the decision on Gilenya is seen by analysts as a key news event for the group this year.
The drug has a clear advantage in being easier to take than injectables from Biogen Idec Inc , Bayer AG, Merck and Teva Pharmaceutical Industries Ltd , as well as not causing the flu-like symptoms seen with some of these products.
But in clinical trials Gilenya has been linked to a range of worrying side effects, including skin cancer, heart problems and infections. These are expected to dominate when Food and Drug Administration (FDA) staff publish briefing documents on the medicine ahead of the panel meeting on June 8.
BILLIONS OF DOLLARS
Jeffrey Holford and colleagues at brokerage Jefferies think these issues are manageable -- especially given the lower dose of the drug now being used -- and predict Gilenya will generate peak annual sales of $3.5 billion, with $1.6 billion by 2014.
Nomura forecasts an even faster ramp-up, to $2.1 billion by 2014. But the overall view is more cautious, with consensus forecasts pointing to sales of $987 million by 2014, according to Thomson Reuters data.
Hovering in many investors' minds is the recent history of Biogen and Elan Corp's (ELN.I) Tysabri, an antibody drug for MS whose sales potential has been severely cut by side effects and a restrictive surveillance programme.
Gilenya's fate will be watched closely by rivals with competing MS pills a year or two behind in development.
They include laquinimod from Teva, teriflunomide from Sanofi-Aventis SA (SASY.PA) and BG-12 from Biogen -- as well as Mylinax from Germany's Merck, which initially looked ahead of Gilenya in the race until a rebuff from the FDA last November. [ID:nGEE5AT1KS]
The FDA, which doesn't always follow the advice of its advisory committees, is due to give its verdict on Gilenya by September.
In Europe, a decision is expected from regulators around the end of the year or early in 2011.
Developing new drugs for MS is an innately tricky business because treatment centres on dampening the body's immune system, which increases the risk of other health problems.
MS disrupts the way in which nerve impulses are carried to and from the brain and can cause permanent disability. Symptoms may include numbness or weakness in one or more limbs, partial or complete loss of vision, tingling or pain and tremors.