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Biocon: The Pegfilgrastim opportunity

Biocon: The Pegfilgrastim opportunity

Biocon: The Pegfilgrastim opportunity
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By Ekta Batra  May 28, 2018 10:30:29 AM IST (Updated)

Biocon is considered the Indian answer to the biosimilar opportunity.

June 4 will be another important day for Biocon-Mylan in their biosimilar journey. By that Monday, Biocon-Mylan will get to know what the USFDA thinks of their application for the biosimilar version of the drug Neulasta or Pegfilgrastim (generic name).

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Neulasta or Pegfilgrastim is an important drug, and has a  market worth $3.9 billion in the US.
It is used to stimulate growth of white blood cells in the body. White blood cells are used to fight infections. Hence the drug is given to patients who are for example, undergoing chemotherapy and see a drop an overall drop in their cell production, including white blood cells, making them susceptible to infections.
Also, Pegfilgrastim is a biosimilar drug which are different from generic drugs.
A biosimilar drug is the most similar version of an existing drug while a generic drug is an exact copy of an existing drug. A biosimilar is only the closest version of a biologic drug as they are made from living organisms such as yeast or protiens and hence cannot be exactly replicated like the chemical structure of generic drugs.
And because biosimilars are not interchangeable like generic drugs, they require independent approval through clinical trials.
Biosimilars is a big market. About 30% of drug sold globally currently are biopharma drugs. In the US alone, 40% of prescription drugs spending is on biologic drugs.
And approvals for the biosimilar versions of these biologic drugs are only just picking up. As of Jan 2018, Europe had approved around 37 biosimilars while the US had approved 8 with biosimilar drugs for the top three biolgics drugs having been approved – Humira, Remicade and Enbrel.
To give an idea of the potential of the market, it is estimated that with the wave of biosimilar approvals expected in the US, spending on original innovator drugs will reduce by $54 billion in the next 8 years.
And while competition is on the rise, biosimilars are better propostions for companies. For reasons such as higher barriers to entry as it requires clinical trials to prove efficacy of a drug and price erosion not being as steep as the 90-95% for generic drugs.
Now, coming back to Biocon. The USFDA has approved their first biosimilar applications in the US in 2017, Trastuzumab or the biosimilar version of breast cancer drug Herceptin. The launch is likely in Q4FY19. Next in line and the opportunity being discussed is Biocon-Mylan’s application for the biosimilar version of Neulasta or Pegfilgrastim. They had received a queries from the USFDA in October 2017 on the application which Biocon replied too. The target action date for the drug is now on June 4th as mentioned earlier.
While it is difficult to predict what the USFDA might do the likely scenarios include
  • Approving the drug - means launch timeline on track, ceteris paribus
  • USFDA coming back with a few queries on the application filed
  • USFDA awaiting resolution of observations at Bengaluru facility, with or without more queries for scenario 2 & 3, US approval will be delayed to when the observations, qeuries are resolved
  • In scenario 3, to recap, the US drug authorities issued seven observations to the company’s Bengaluru facility in a pre-approval inspection (PAI) in April 2018.
    A PAI is an inspection conducted by the USFDA to approve the manufacturing process for a specific drug ahead of its approval – in this case it was for Pegfilgrastim.
    Biocon has responded to the observations and nalysts are confident. They say the observations appear benign with no data integrity. Mylan also catergorized the observations under ‘continous improvement’ without changing their estimated date of launch for the drug.
    And Biocon’s track record provides further assurance. The most recent being solving the eight observations issued by the US in the pre approval inspection for Trastuzumab.
    However, while the street is confident the observations won’t create a deterrent, one can’t bet a 100% that the USFDA will give the go ahead, they might just want to see the observations solved before the approval.
    But is that the end of the issues?
    No, say analysts. Besides the USFDA approval, the launch could also be dependant on resolution of an intellectual property litigation. It has to do two process patents (how a drug is made) and until now only one company, Coherus has been able to obtain a favorable decision on it.
    This litigation could entail either a settlement with the innovator – that means a mutually decided date of launch or an at-risk launch –Biocon- Mylan launch the drug despite the litigation being on, even at the risk of losing it. It will be a space to watch.
    What is the blue sky scenario?
    If all goes well, then as per Mylan’s latest guidance Pegfilgrastim could be launched by second half of 2018 and could very well make it the first biosimilar entrant for Pegfilgrastim in the US. Analysts estimate Biocon can make upto $60-70m profit from the drug in the first year itself. The second year earnings will depend on the competition. Pharma firm Coherus is likely to enter the market in late 2018 with Amneal, Intas and Sandoz lined up.
    The larger picture
    Biocon is considered the Indian answer to the biosimilar opportunity. It caught the bus early and that is the reason for its outperformance. Besides trastuzumab and pegfilgrastim, some of the other biosimilar opportunities the co has in the US includes its application for insulin glargine (used for diabetes) which under the New Drug Application is under review by the FDA.
    While the US is a space to watch, their biosimilar presence in Europe and other countries calls for a whole other write up.​
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