1Q Preview: TEVA with Promising Start to 2024 and Key Pipeline Developments
Ahead of TEVA´s 1Q results on May 8th, let’s have a look at some of the developments that are shaping the company and should have interest for investors.
Market Dynamics and Initial 2024 Performance
TEVA Pharmaceuticals has showcased a notable uptrend, with its stock price surging by 31% year-to-date. This increase is primarily attributed to the market’s recognition of TEVA's more stable EBITDA performance and its pivot to growth strategy, putting the years of opioid litigation behind. Despite this growth, there is solid potential for additional upside to the company’s and its share price performance, based on expectations that sales and EBITDA will grow. I don’t think this growth is currently reflected in the current share price. An important contributor to this is the developments in the pipeline for drugs such as TL1a and the long-acting injectable (LAI) version of olanzapine.
I remain confident that TEVA is on a healthy growth trajectory and have solid assets to help drive sales.
For the first quarter it will be important to see how Austedo (Tardive dyskinesia and Huntington's disease chorea) and Generics in North America are performing. Normally 1Q is soft for Austedo due to strong 4Q performance due to how inventory is handled at the channel level.
Pipeline and Market Potential
In terms of pipeline development, the focus remains sharply on TEVA's olanzapine LAI (adult patients with schizophrenia). Olanzapine is attractive to physicians as it is delivered subcutaneous and is expected to have less risk of blood exposure. It is not a drug that is expected to reach blockbuster status, but probably not far from it given segment size and growth.
The market for schizophrenia medications is projected to reach $9.46 billion by 2030, fueled by increasing interest in injectable treatments and advanced second-generation therapeutics.
LAI Antipsychotics: A Growing Market with Significant Opportunities
The market for LAI antipsychotics in the U.S. is both substantial and underserved, with around 2.4 million schizophrenia patients, of which approximately 1.6 million are undergoing treatment. Despite the prevalence of oral antipsychotics, their daily regimen suffers from poor patient adherence. The LAI market, although smaller in comparison to oral medications, is experiencing robust year-over-year growth and offers considerable potential due to its benefits over oral formulations. These include sustained drug release leading to better compliance, protection of drug patents limiting generic competition, and ongoing innovation by other pharmaceutical companies.
Olanzapine LAI: A Strong Candidate Amidst the Competition
I have seen sales estimates for olanzapine LAI ranging from $820 - $870 million. This optimism is based on the expected market share capture and the ongoing SOLARIS clinical trial (Kelli R. Franzenburg, PhD), which could potentially establish olanzapine as the first LAI with a favorable safety profile. The drug is already a well-established treatment in the oral schizophrenia market, suggesting a positive stance towards LAI form, provided safety concerns are adequately addressed.
High level view of the SOLARIS trial:
The SOLARIS trial, presented at Psych Congress 2023 and sponsored by Teva, is a Phase 3 study evaluating the safety, efficacy, and tolerability of TV-44749, a subcutaneous, long-acting olanzapine formulation for adults with schizophrenia. It aims to improve treatment adherence and reduce relapse by potentially mitigating the risk of post-injection delirium/sedation syndrome (PDSS) associated with existing intramuscular LAI antipsychotics.
Key Points:
Trial Design: SOLARIS is a randomized, double-blind, placebo-controlled study with an 8-week evaluation period followed by a 48-week open-label safety phase.
Participants: Adults with recent schizophrenia relapse who might benefit from hospitalization are eligible for this study.
Intervention: Participants receive one of three dosages of TV-44749 or a placebo monthly, with the placebo group rerandomized after 8 weeks.
Primary Endpoint: The main focus is on the change in schizophrenia symptoms measured by the Positive and Negative Syndrome Scale (PANSS) at week 8.
Safety and Efficacy: Secondary outcomes include changes in the Clinical Global Impression-Severity (CGI-S) and Personal and Social Performance Scale (PSP), with a special focus on safety and tolerability, including monitoring for PDSS
Conclusion
TEVA's approach, integrating robust pipeline developments with strategic market positioning, positions it well for sustained growth. However, potential risks such as failure in clinical advancements for TL1a and olanzapine LAI, slower-than-expected uptake of new products like Uzedy, and underperformance in Austedo sales need careful monitoring. Overall, TEVA's diverse portfolio and innovative pipeline offer a solid foundation for future growth, and a return to a significant role in the global pharmaceutical industry. Worthwhile to remember that TEVA´s debt weighs down the share price by $14-$15. The debt reduction has been well on track for years now, and will also be a point of interest on Wednesday 8th.
I continue to be optimistic about TEVA's robust growth path and believe they possess strong assets that will propel sales forward.