Epirus Bankruptcy Underscores Biosimilar Challenges
The recent bankruptcy filing of Epirus Pharmaceuticals, an early stage company developing biosimilars, is a stark reminder of the risks inherent in biosimilar drug development. The company had previously shed 40% of its workforce and ceased late-stage development of its lead asset, a biosimilar version of Johnson & Johnson’s Remicade, but was attempting to maintain development of two smaller biosimilar opportunities, Soliris and Actermra. At the end of Q1 2016 the company reported cash-on-hand of $25 million but short-term liabilities of $32 million.
The Epirus bankruptcy followed on the heels of a chaotic IPO for another biosimilar developer, Oncobiologics, whose stock lost 20% on its first day of trading and has declined further despite a brief rebound in June. However two other emerging biosimilar players have fared better; Collectively Pfenex and Coherus raised $135m via Initial Public Offerings in 2014 and the former raised another $40m through a Secondary offering last year.
These events reflect the high-risk nature of the biosimilar market space as we detailed in our PharmSource Trend Report Catching a Wave: How Much Will CMOs Benefit From Biosimilars? (January 2015).
The field is dominated by global biopharma companies, some of which are playing both sides of the field: both Amgen and Pfizer have multiple biosimilars in development while simultaneously defending their own biologics franchises.
The global biopharma companies are having success with their biosimilar initiatives. In the US Pfizer has gained approval of Inflectra (acquired via its purchase of Hospira) and Lilly for Basilar (a version of Sanofi’s Lantus). The situation is in Europe is more advanced; since the beginning of the year, two more biosimilars, Benepali and Flixabi (both Biogen/Samsung) have joined the roster of approved products, while a third (SB5, a version of AbbVie’s Humira) has recently been accepted for review by the EMA. In reality this is the tip of the iceberg as there are multiple biosimilar versions of the highly profitable monoclonal antibodies Enbrel, Humira, Rituxan and Remicade in late stage development. Crucially, US formularies are beginning to take notice: for 2017 CVS Health included Sandoz Zarxio in place of Neupogen while Basaglar replaced Lantus.
The global biopharma companies possess the commercial savvy to successfully navigate the various payers, whether national governments in Europe or the US PBMs. But they are invariably reluctant to outsource large molecule drugs and don’t represent much of an opportunity for contract manufacturing organizations (CMOs).
Meanwhile start-ups like Epirus and Oncobiologics that do depend on CMOs face an uphill challenge to be successful. They must fight for funding while they contend with limited manufacturing know-how and their lack of leverage with buyers. A single digit market share might seem attractive to a small company but payers may not want to deal with an unproven supplier with a single product. Further, it remains to be seen just how many players the field can accommodate once it matures.
Biosimilars may represent a big eventual market opportunity, but CMO-dependent start-ups are at a huge disadvantage to established global bio/pharma companies.