Breakthrough drug for Huntington disease drives Neuland up 20%

Malini BhuptaMoneycontrol NewsShares of Neuland Laboratories rose 20 percent on Wednesday following an announcement made by Teva that the US Food and Drug Administration had accepted its new drug application for the treatment of tardive dyskinesia. The US FDA has also granted a priority for SD-809 (deutetrabenazine) for the treatment of the condition.Analysts believe that Neuland Labs is a supplier of API (active pharma ingredient) to Teva for this drug, which is used in the therapy of Huntington Disease, a disorder related to tardive dyskinesia. If the new drug application is accepted, Neuland will be a key beneficiary.In an earnings call in August 2016, the company had declined to comment on the company beginning its API supplies to Teva for the same drug.The company had said: “We have actually not mentioned specifically which customers we are working with for which products so obviously this is a question that I cannot answer.”Teva’s new drug application for SD-809 is based on results from two Phase III studies. A Priority Review is an expedited review granted by the FDA that allows for a faster evaluation of applications for drugs that could be significant improvements to the safety or effectiveness in the treatment of serious conditions. SD-809 was previously granted Breakthrough Therapy Designation by the FDA.In its press release on Tuesday, Teva said it was committed to advancing new therapeutic options for patients with neurological and movement disorders.“There remains a significant unmet medical need in tardive dyskinesia,” said Michael Hayden, MD, Ph.D., President of Global R&D and Chief Scientific Officer at Teva. “SD-809 has the potential to reduce the severity of the abnormal involuntary movements of tardive dyskinesia which lead to social isolation for these patients. Currently, there is no approved therapy in the US for TD and this important milestone brings Teva one step closer to making SD-809 available,” the release added.Analysts expect Teva to launch the drug in 2017, which could significantly boost Neuland’s earnings. In the third quarter of FY17, the Neuland’s revenues grew a tepid 7.6 percent year-on-year due to weakness in the niche API segment. The niche API segment contributed only 19 percent to its third quarter revenues against 26 percent in the year-ago period. Analysts expect this to improve in FY18 if Teva actually launches the drug in 2017.In addition, analysts believe that there is a second trigger to Neuland Labs which is the other API it is expected to supply to Mylan for a respiratory inhaler.