AstraZeneca’s biologics shop makes a decisive move in the biosimilars market.
MedImmune, the biologics shop bought by AstraZeneca (AZ) for a staggering $15 billion in 2007 promising one new drug a year for the foundering British firm, has made precious little news since the deal. But all of a sudden the post-Labor Day wires were crackling with MedImmune stories: its big new monoclonal antibody, motavizumab, for prevention of a common but serious respiratory virus in infants got shot down by FDA for the second time, while the SEC charged a hedge fund heavy and his buddy who just happens to be executive director of business development at Merck’s vaccine unit of insider trading around the AZ/MedImmune deal.
With neither story lending itself to happy spin, MedImmune made a lame effort to change the subject with what appeared to be a hasty pitch to PE (and, we presume, other rags) that caught our interest: Its new R&D strategy for copycat biologics will focus exclusively on so-called biosuperiors rather than biosimilars. Now, given that FDA has been authorized to define a regulatory pathway for generic versions of biologics only with the passage of the healthcare reform legislation, MedImmune’s bet on biosuperiors might be viewed as putting the marketing before the molecule, so to speak. Yet it’s a signal that the top pharmas are already deep into their plans for how to play in this largely notional market, albeit one that is estimated to reach $17 billion by 2017, according to Decision Resources.
Biosuperiors, aka “biobetters,” are to biosimilars what, say, Apple’s iPod Touch is to its iPod shuffle. Where a biosimilar will be a mere structural imitation of an Avastin or an Enbrel promising the same effect at a reduced price, a biobetter will possess some molecular or chemical modification or other that constitutes an improvement over the originator drug (and its biosimilar competitors). The enhancement may range from a longer half-life, allowing for less frequent dosing, to more potency or less toxicity. If these were small-molecule drugs, the gussied-up me-too version would be a branded product that had proved its specific advantage to FDA.
So why would MedImmune commit entirely to developing biosuperior antibodies? Unfortunately, we can only speculate, because the Virginia-based biotech told us it was “premature” to get into the weeds about the refocus.
Although little is known for certain about how the biosimilar market will develop, the one unambiguous feature is that copycat biologics are unlikely to cannibalize sales of the innovator product with the same bottomless appetite as small-molecule generics. The discounted price tag of a biosimilar is estimated to range from as little as 10 percent to as much as 50 percent off the branded drug. That’s more than chump change for products that may typically run $100,000 or more, but given the anticipated cost of manufacturing and marketing, the margins may not inspire sufficient awe to attract the kind of intense competition that would make substitution a no-brainer for doctors and consumers, who are expected to remain more than a little wary of the entire idea of copycat cancer drugs and the like for some time. Over the several years since the launch of growth-hormone Omnitrope, the first-ever FDA-approved biosimilar, the drug has managed to capture a mere 1 percent of the total market and make less than $4 million in annual sales, according to IMS Health.
After sizing up all the hurdles, MedImmune apparently came up with a sound economic rationale for taking the higher risk, higher reward route promised by value-added biobetters. And the risk will most definitely be higher, says Ernst & Young’s Global Biotechology Leader, Glen Giovannetti. “In order to support any claim of superiority, FDA is almost certain to require Phase 3 trials,” he says. “They may be smaller and faster than those for innovator drugs, but the investment will be greater—perhaps considerably so—than for a straightforward biosimilar.”
When asked for clarification, FDA gave a rather frosty reply. “The addition of a pathway for those biologics that do not intend to be ‘biosimilar’ but instead facilitate development of improvements to currently licensed products was not included in the legislation.”
It’s worth noting that AstraZeneca is widely viewed as the most wobbly pharma giant, due to lose up to half of its profits over the next few years as a result of patent expirations. And MedImmune has already bailed on its promise of a drug a year. To compete with the presumed biosimilar big boys like Novartis, Merck, Pfizer, Teva, not to mention the Indian pharmas that are already selling knockoff biologics in the developing world, AZ has to move fast to make the most of MedImmune’s impressive antibody development and manufacturing assets.
“From the outside, all we can say is that a biosuperior strategy makes sense economically, in terms of being able to make a ‘cheaper but better’ pitch,” says Giovannetti. “But MedImmune may have other more technical reasons, such as the fact that they already are an originator biotech or they want to leverage their existing technology.”
Suffice to say, it will be entertaining, at the very least, to watch Big Pharma do battle over the biosimilar and biobetter (and biobest?) billions.