* Teva hopes for U.S. regulatory green light in 2 years
* Teva developing laquinimod drug with Active Biotech
* Laquinimod a rival to new Novartis pill Gilenya
* Teva stock up 6 percent, Active Biotech gains 15 percent
(Recasts, adds share reaction, comments from CFO, details)
By Steven Scheer
JERUSALEM, Dec 9 (Reuters) - Teva Pharmaceutical Industries expects its pill-based treatment for multiple sclerosis to receive U.S. regulatory approval within two years after a clinical trial met its main goal, it said on Thursday.
Laquinimod, being developed with Sweden's Active Biotech, is jockeying for position in the emerging field of oral treatments for multiple sclerosis (MS), where Novartis's recently approved Gilenya is the current leader.
Teva is best known as the world's largest generic drugmaker, but it also has a 30 percent market share globally -- and 40 percent in the United States -- for its branded injectable MS drug Copaxone, and the new drug could boost that franchise.
Recently, investors have been worried about Copaxone's future, given the risk of generic competition to the product.
Teva's shares had fallen to near year lows but they were up 6.0 percent by 1323 GMT on the positive results from the first of two Phase III clinical trials for laquinimod. Active Biotech jumped 15 percent.
"The big question is: will this be enough to reverse the negative sentiment?" said Yoav Burgan, head of sell-side research at the Poalim Sahar brokerage.
"The results seem very promising but we don't have details," he said, noting they will be presented in early 2011. "Then, we will be much smarter."
Teva said the laquinimod study comparing efficacy against a placebo met the primary endpoint of reducing annualised relapse rates, and treatment with the drug significantly slowed progression of disability.
FAST TRACK
"The safety profile of the product is good and there were no alarming signals that worry us," Ben-Zion Weiner, Teva's chief research and development officer, told Reuters.
Deutsche Bank analysts said in a client note: "Given its putative profile as a potentially very safe but modestly effective drug, we see it as fitting a niche in patients with early-stage or less aggressive disease."
A second study that compares laquinimod against another MS drug is expected to be completed in the third quarter of 2011.
"If all is okay, we will submit in early 2012," Weiner said of the company's planned application to the U.S. Food and Drug Administration.
The FDA has fast-tracked laquinimod, meaning the approval process should be shorter than normal.
"If all goes right, approval should be in a year and a half to maybe a little more," said Chief Financial Officer Eyal Desheh. "Teva with two multiple sclerosis treatments in the market would be a huge advantage over competitors," he added.
In September, Swiss drugmaker Novartis's MS Gilenya won U.S. approval, making it the first oral treatment for the ailment in the United States.
Further competition could come from Germany's Merck KGaA's cladribine pills, as well as from oral drugs in development at Biogen and Sanofi-Aventis.
Teva's Copaxone already competes with injectable interferon drugs from Biogen, Merck KGaA and Bayer, as well as Tysabri from Biogen and Elan.
"Laquinimod is a good answer to generic competition for Copaxone," Burgan said. "Gilenya and other oral treatments should be considered substantial competition for Copaxone and other existing MS treatments on the market."
Weiner said existing drugs, such as Copaxone, typically treat MS in earlier stages such as for relapses. Laquinimod is also aimed at the relapse stage but Teva said it was also trying to prove the drug helps in the disability stage of the disease.
"We will file (to the FDA) with both relapse and disability," he said. (Additional reporting by Abhinav Sharma in Bangalore and Ben Hirschler in London; Editing by Erica Billingham)