Amgen in the Crosshairs As Biogen, Hospira, Merck & Co. All Climb on Biosimilar Bandwagon: Citi

March 31, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor

Biosimilars are gaining steam and moving ahead and Wall Street analysts are already issuing warnings about how this new section of the market is a real threat to “originator biologics” is becoming a reality, Yaron Werber, head of the biotech analysis team at Citigroup, said this week.

Swiss drugmaker Novartis AG won approval from the U.S. Food and Drug Administration (FDA) for the nation’s first biosimilar drug March 6, after the FDA said the company could now sell its white blood cell drug Zarxio, a knockoff of Amgen ’s blockbuster treatment Neupogen, or filgrastim.

“The biosimilar space has been picking up steam with the recent approval of Sandoz’s biosimilar Neupogen Zarxio, and filing of several biosimilar applications,” wrote Werber. “We expect that biosimilars will come into focus and will compete with originator biologics in the next several years as has been recently covered in our note "Biosimilars: Real, Dangerous, Coming Soon.'”

Biosimilars, which are made inside a living cell, are always uniquely different in composition, which differentiates them from generic drugs, which are exact replicas of other drugs. They have been widely available in Europe since 2006, but the FDA was only granted the right to review and approve them when Obamacare was passed in 2010.

Neupogen raked in $1.2 billion for Amgen last year, a lucrative market that Novartis, and its Sandoz unit that makes Zarxio, are now eyeing eagerly. The FDA said in January that an internal panel seemed inclined to give Zarxio the green light to treat the same five conditions Neupogen does. Sandoz declined to issue a price target for Zarxio.

Those approvals will also cause some turbulence for Amgen, said Werber, as the company attempts to fight off competition across both its generic and biosimilar spaces.

“We believe that biosimilars will be a headwind to Amgen initially as discussed in our recent note, "Biosimilars --It’s Complicated," but foresee that Amgen will post a 10 percent CAGR EPS through this period driven by their novel pipeline and late stage biosimilar pipeline,” said Werber. “We view the Biogen Idec biosimilar JV with Samsung Bioepis as potential upside to our estimates as it is driven by ex-U.S. sales.”

The FDA granted approval after parsing a Sandoz pivotal head-to-head PIONEER study that showed high similarity between the two drugs. During that study, Zarxio and the reference product both produced the expected reduction in the duration of severe neutropenia in cancer patients undergoing myelosuppressive chemotherapy (1.17 and 1.20 days for Zarxio and the reference product, respectively). The mean time to absolute neutrophil count recovery in cycle 1 was also similar (1.8 days ± 0.97 in ZARXIO arm vs 1.7 days ± 0.81 in reference product arm). No immunogenicity or antibodies against rhG-CSF were detected throughout the study.

That data was enough for the FDA to issue the historic decision, opening the floodgates for the biosimilar market to begin crowding American markets, a move that has long been sought by U.S. health insurers and other large health cost payers. With cheaper biosimilar drugs, health costs will come down for patients everywhere, they’ve argued, particularly as expensive patented drugs lose their protection.

Marketed as Zarzio outside of the U.S., the Sandoz biosimilar filgrastim is available in more than 60 countries worldwide. Now, Biogen and Hospira, Inc. had better prepare for similar competition for their drugs and companies like Bioepis and Epogen, as well as Merck & Co., Inc. ’s Enbrel, wrote Citigroup.

“Biogen biosimilar JV with Samsung Bioepis is moving ahead with two marketing authorization applications (MAA) being validated by European Medicines Agency (EMA). SB2 biosimilar of Remicade has been validated for review by EMA this week,” said Werber.

Bioepis had earlier in the year filed for SB4, a biosimilar Enbrel which was validated by EMA in January. Biogen has E.U. marketing rights and Merck has U.S marketing rights for biosimilars developed by Bioepis.

“At this point it is not clear whether Merck plans to file the biosimilar Enbrel in the U.S. given that Amgen has patent protection until November 22, 2028,” said Werber. “Bioepis JV has been overlooked by us and the Street as JV revenues are not included in models and could potentially provide nice tailwind to revenue once the JV becomes profitable.”

As of end of 2014 Biogen had 10 percent interest in Bioepis and has an option to purchase additional stock in Bioepis to increase ownership up to 49.9 percent. Biogen also has a license agreement, a technical development services agreement and a manufacturing agreement with Bioepis.

“Biogen will receive single digit royalties on all biosimilar products developed and commercialized by Bioepis. Biogen will also manufacture biosimilar products for Bioepis under contract which will be recognized as other revenue,” said Werber. “SB4 and other biosimilar will be mostly manufactured at Biogen’s Denmark plant at Hillerød plant where Biogen currently produces Tysabri.”

In addition, Hospira’s Epogen biosimilar data has been comparable to Amgen’s Epogen, said Werber.

“Hospira presented data at the National Kidney Foundation Spring Clinical Meeting comparing their version of Epoetin to Amgen’s Epogen,” concluded Werber. “This data looked at PK and PD parameters following single and multiple subcutaneous doses to healthy subjects through 20 and 26 days respectively. The primary PK parameters used serum epoetin. Results supported similarity of both versions of Epoetin.”