WASHINGTON (AP) -- Shares of Biogen Idec fell Wednesday after an analyst said the company's new multiple sclerosis treatment could face pricing pressure in Europe from generic drugs.
THE SPARK: Analyst Dr. Yaron Werber lowered his rating on the Massachusetts biotech company's stock to "Neutral" from "Buy." Werber said in a research note that he still likes the drug Tecfidera, but he doesn't think the European Medicines Agency will provide regulatory data protection on the drug. That would prevent other companies from referencing its data when they submit their generic drug applications for lower-priced versions.
THE BACKGROUND: Analysts expect that Tecfidera, a pill taken once a day, will become a leading treatment for multiple sclerosis. The U.S. Food and Drug Administration approved it in late March.
THE ANALYSIS: Werber said the drug's U.S. launch should turn out better than expected, and Tecfidera may tally $422 million in sales this year. "We are big fans of the drug in the U.S.," Werber wrote in a note to investors Tuesday.
But the analyst also said that the stock has had a nice run so far this year and its high price-to-earnings multiple reflects an investor expectation for upside, not a negative surprise.
"We will look for a better entry point to get more constructive on the stock again once the risks facing Tecfidera in Europe become clearer or after the stock corrects," the analyst wrote.
Werber had raised his rating on Biogen shares to "Buy" from "Neutral" in February.
SHARE ACTION: Down $15.16, or 6.8 percent, to $207.91 in afternoon trading.