Serono SA is teaming up with Pfizer Inc. to co-promote the multiple sclerosis drug Rebif in the United States, which will position Rebif directly against Biogen Inc.'s powerhouse drug Avonex.

With the marketing agreement, Pfizer gave Serono a $200 million up-front fee. The companies said they would share all commercialization and development costs, and Pfizer will receive "commissions on sales," said Deborah Brown, executive vice president of neurology for Serono Inc., the Rockland, Mass.-based U.S. arm of Serono SA, of Geneva.

Brown said the companies aren't revealing additional financial details about the agreement.

"We are going to be giving more guidance on sales in our quarterly conference call [scheduled for July 24]," Brown said.

Matt Geller, analyst at CIBC World Markets Corp. in New York, said the deal is a promising one for Serono.

"I think it puts Serono in a very strong position," Geller told BioWorld Today, noting that Biogen is "clearly going to meet its match in the Pfizer sales force."

Geller said that it is likely that Pfizer, in addition to approaching the market for newly diagnosed patients, will also go after those MS patients who had disease progression with Avonex to persuade them to switch drugs.

"I think ultimately Rebif can dominate the MS market," Geller said.

For starters, Geller said in a research note, he believes Rebif sales in the U.S. for 2002 "could exceed the previously estimated $60 [million] to $70 million."

Serono won FDA approval to market Rebif (interferon beta 1-a) in the U.S. in March. The drug already is registered in 70 countries and is the market leader in sales outside the U.S., Brown said. It won approval despite Biogen having U.S. orphan drug status with Avonex until May 2003. (See BioWorld Today, March 11, 2002.)

Serono began selling Rebif in the U.S. with its own sales force after it gained approval.

"We launched the next day after approval with a team we had built up in anticipation [of the approval]," Brown said.

Since mid-March, the company has gained about 4 percent in total prescription market share, Brown said.

"From the sales level all the way up to the CEO, we're very happy with the way the launch has gone," she said.

Regarding the combined sales force from New York-based Pfizer and Serono, Brown could not reveal the total number, but said that it would be "a team largely dedicated to neurology."

"Pfizer has a well-established presence in neurology, so it's not like we're putting in front of [doctors] people they don't know," she said.

Neurontin, a Pfizer drug prescribed for epileptic seizures and neuropathic pain, is the lead drug of the combined sales team that will be targeting neurologists.

"The combined forces will have substantial reach and a greater reach and frequency than all of our other MS competitors," Brown said.

With expanded frequency, she said the teams at the regional and territorial level will be empowered to make the decisions about whether it is a Pfizer or a Serono team member who makes sales calls on particular clients.

"It allows us to increase our frequency of calling on people we are already calling," she said.

In terms of positioning, Brown said the team is claiming Rebif to be superior to Avonex, based on the results of its EVIDENCE trial (Evidence for Interferon Dose-effect: European-North American Comparative Efficacy). (See BioWorld Today, June 25, 2001.)

Serono won approval to market Rebif in the U.S. after filing data from the EVIDENCE trial, which pitted Rebif directly against Avonex in an efficacy study. Serono claimed data from the trial showed that patients treated with Rebif had a 90 percent greater chance of remaining relapse-free than patients treated with Avonex.

Biogen said after results were disclosed that a six-month study was not long enough to prove anything when dealing with MS patients.

"While it's certainly true that we cannot make very broad claims against Avonex regarding outcome, we can certainly claim that we are clinically superior as defined by the proportion of patients that were relapse-free at 24 weeks," Brown said.

Avonex is the leading prescribed product in the U.S. for multiple sclerosis. Tom Lang, president of Serono in the U.S., told BioWorld Today in March that Avonex has a U.S. market share of about 50 percent. The two other competitors are Betaseron (interferon beta-1b) from Emeryville, Calif.-based Chiron Corp., partnered with Schering AG, of Berlin, and Copaxone (glatiramer acetate for injection), sold by Jerusalem-based Teva Pharmaceuticals Industries Ltd.

In light of the news, Biogen's stock was downgraded to "neutral" by Atlanta-based SunTrust Robinson Humphrey senior biotech analyst Martin Auster.

"The market in general thought that Rebif would be formidable," Auster said.

Now, with Pfizer's "marketing muscle" behind Serono, he said, "Biogen is going to have a tough time."

He projected that Avonex's market share, which he noted was 56 percent in 2001, would drop to 38 percent in 2004, which is lower than the 42.5 percent he originally projected for sales of Avonex that year.

Auster said that by that time, Rebif stands to capture more than 25 percent.

"I think we'll see a slow bleed of [Avonex sales] until their market share is roughly equivalent [to Serono's]," Auster said.

Serono's stock (NYSE:SRA) rose $1.27 Thursday, or 8.9 percent, to close at $15.60. Biogen's shares (NASDAQ:BGEN) fell $2.97, or 8.4 percent, to close at $32.30.