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Biogen Idec (BIIB - Analyst Report) shares shot up 13.15% immediately after the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) granted new active substance (NAS) designation to dimethyl fumarate in the company’s new oral multiple sclerosis treatment, Tecfidera.

Tecfidera, which is currently available in the U.S. for the treatment of people with relapsing forms of multiple sclerosis, is yet to gain approval in the EU. Shortly after receiving a positive opinion from the CHMP in Mar 2013 regarding the EU approval of Tecfidera, Biogen had announced that it expects a delay in the EU launch of Tecfidera as it continues to work on strengthening its patent coverage.

With the NAS designation in place, Tecfidera will enjoy 10 years of regulatory exclusivity in the EU. Final approval in the EU should come shortly.

Meanwhile, the drug is already off to a strong start in the U.S. bringing in sales of $478 million since it was launched in early April. Biogen reported that according to IMS, Tecfidera is the leading oral multiple sclerosis therapy in the U.S.

Our Take

The NAS designation for Tecfidera in the EU has removed a significant concern surrounding the stock. Tecfidera is one of the most important new products in Biogen’s portfolio. Although Tecfidera is protected by a European patent until 2028, the 10 years of regulatory exclusivity strengthens patent protection for the candidate further.

Once approved in the EU, Tecfidera will enter the multiple sclerosis market which has players like Novartis’ (NVS - Analyst Report) Gilenya and Sanofi’s (SNY - Analyst Report) Aubagio.

Biogen currently carries a Zacks Rank # 3 (Hold). Some better-ranked stocks include Actelion Ltd. (ALIOF). Actelion is a Zacks Rank #1 (Strong Buy) stock.

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