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Mylan's move higher after FDA approval 'a little bit exaggerated,' says Wells Fargo analyst

  • While Mylan's FDA approval for its generic MS drug is a big win, simple math shows that investor reaction may be a bit too enthusiastic, David Maris said.
  • Mylan shares closed 16 percent higher after it announced the Food and Drug Administration approved its generic version of Teva Pharmaceutical's multiple sclerosis treatment Copaxone.
  • However, Maris said he understands why people are excited.

Mylan shares surged on Wednesday after news about the approval of its generic drug for multiple sclerosis, but Wells Fargo Securities senior analyst David Maris told CNBC the move was "a little bit exaggerated."

Mylan closed 16 percent higher after it announced the Food and Drug Administration approved its generic version of Teva Pharmaceutical's multiple sclerosis treatment Copaxone.

Mylan said that shipping was imminent for its Glatiramer Acetate 40 mg/mL for 3-times-a-week injection and 20 mg/mL for once-daily injection.

While it is a big win for Mylan, Maris told "Power Lunch" that "simple math" shows that investor reaction may be a little too enthusiastic.

He said that, optimistically, generic Copaxone 40 mg could contribute about $0.13 in earnings per share per quarter.

"However, it may be unrealistic to assume a quick share shift given the patient population and the nature of the disease. It will bear close watching whether the market converts to a new player, or like in the case of the 20 mg, Teva is able to maintain a good amount of share," Maris wrote in a research note earlier Wednesday.

However, he told CNBC he understands why people are excited.

"They've only had bad news in the generic industry recently, and now you have a little bright news here with a key win for Mylan," he said.

The FDA on Monday said it would introduce new measures to speed up bringing generic versions of complex drugs to the market. The moves came as the agency attempts to deal with the rising cost of drugs in the U.S.

However, Maris warned what FDA Commissioner Scott Gottlieb "gives with one he can take away with another."

"One thing to keep in mind is a complex generic like EpiPen, there's no AB rated, non-Mylan generic out there. That could be one of the things he targets next," he said.

— CNBC's AJ Vielma, Berkeley Lovelace and Reuters contributed to this report.

Disclosures: Teva Pharmaceuticals is an investment banking client of Wells Fargo Securities. Wells Fargo Securities maintains a market in the common stock of Teva. Wells Fargo Securities or its affiliates has a significant financial interest in Teva.

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