American Copycats: Can Biosimilars Catch On And Cut Costs In U.S.?

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to make as conventional generics, which are typically identical copies (although not always) of small molecules, synthesized in a chemistry lab. Biologic drugs, on the other hand, are typically proteins, up to 1000 times as big as traditional drugs, and are made by living cells. Making a new biologic that does the same therapeutic task as an existing one is more complicated, and copying them exactly is likely impossible.

Biologics’ properties rely on the way they fold from long chains of amino acids into complex shapes, as well as on a host of enzymatic processes that happen in the cells that churn them out. Changes in their production—the size of the bioreactor, the temperature or pH inside, the food the cells are provided, for example—might cause inconsistencies.

To reproduce a biologic, Lanfear says, “You have to do with purpose what the originator might have done via serendipity.”

Coherus has spent many of its millions on both people and tools to reverse engineer and analyze those original proteins then produce biosimilar versions. With its late 2014 IPO and subsequent stock offerings, it has now brought in more than $400 million and expects to have 125 employees by year’s end. “That’s a lot of money to raise for a biotech company,” says Lanfear. “It’s an expensive business.”

In a recent regulatory filing, Momenta framed the competitive landscape succinctly: “Many companies… have announced their intention to develop and commercialize biosimilars. Many of these companies are significantly larger than us, have substantially greater financial resources and have significant pre-existing resources to devote to the biosimilars business.”

Some of these companies—Amgen, Boehringer Ingelheim, Biogen (NASDAQ: BIIB), Pfizer (NYSE: PFE)—are playing both sides of the fence, and might be able to use their massive branded-drug profits to carry losses on the biosimilar side for a while. Or they can leverage their formidable sales forces on the branded side to promote biosimilar products.

An Amgen alum, Lanfear is unfazed. He says he has recruited several top “process” scientists like himself who have Amgen, Genentech, Merck, and other big companies on their resume. These are people who turn scientific ideas into big, scalable products. They’re also quite familiar with many of the products that are, or will be, their targets. For example, the autoimmune drug etanercept (Enbrel) is one of three in the Coherus late-stage pipeline; Coherus CMO Barbara Finck was the medical director at etanercept’s creator Immunex before it was bought by Amgen.

Starting from scratch, Coherus wasn’t saddled with those companies’ old-school processes. But before its $1 million Series A, says Lanfear, “I was running it off my platinum card for a while.” To parody those early days, says Lanfear, the CSO and cofounder Alan Herman and his team performed a rap at the last company picnic: “Four guys and a slide deck / This could be a train wreck.”

Making protein-based drugs like etanercept is done all over the world in vast quantities, but it’s no cakewalk. Just ask Genzyme. Manufacturing problems revealed in 2009 hobbled the company, leading to penalties and investor revolt, and were a big part of what prompted an eventual $20 billion takeover by Sanofi in 2011.

To be clear, the expertise needed to approximate large proteins and produce them at massive scale is not the same as the innovation behind, say, new antibody discovery platforms that occasionally attract millions of dollars in venture funding and well-heeled partners. “Innovation here is not how you and I typically think of it,” says 5am Ventures managing partner Scott Rocklage, an early investor in biosimilar firm Epirus Biopharmaceuticals (NASDAQ: EPRS) of Boston. There might be room for technical improvements—tweaks to a well-known manufacturing process, say—but this won’t be a land of biotech breakthroughs.

In fact, says Rocklage, caution is the watchword: the brand-new U.S. biosimilar market, with some key rules yet to be defined by the FDA, is too uncertain to enter right now. Epirus is going first into markets where biosimilars are more established. “We’ll get to the U.S. when the pathway is well known,” says Rocklage, who sits on the Epirus board.

What’s got Epirus and others hesitant about the U.S.? The answer lies in the name “biosimilar”—which is deliberately not “biogeneric.” For approval of a conventional generic, a company only needs to show, with abbreviated tests in a handful of people, that they’ve matched the original in several ways.

But biosimilars, which will never be exact matches, will need a greater body of evidence to pass FDA muster, likely including animal tests and more extensive human studies, although not as much as is required for original drugs. The ultimate goal is to have … Next Page »

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