Los cambios en la clase campesina

Why the US is behind, and why letting patents expire is also good Just as introduction of product patents were important to awaken the

Korean/Indian/Japanese pharmaceutical sectors, expiry of patents can also be an incentive for industry – in this case, the generic pharmaceutical industry. US patents that were filed before 8 June, 1995 received either 20 years from the filing date or 17 years from grant, whichever is longer. Since most of the early monoclonal antibody

therapeutics were filed before 1995, what resulted was an artificially extended patent term compared to Europe or Japan. For example Remicade expires in 2018 and Herceptin in 2019. Because patent expiry of these blockbuster biologics was delayed, US companies were the slowest to awaken to the biosimilar opportunity.

Although Merck, Pfizer, Amgen, and Biogen-Idec have commented publicly on the attractiveness of the biosimilar market, there has been relatively little progress. Only global generic players from the US such as Hospira or Mylan have been successful so far, though limited to first-generation biosimilars. Since many of the US companies are behind, we believe that many of these companies will seek partners overseas to in- license products that have already been developed. Examples include Hospira-Celltrion, Pfizer-Biocon (insulin), and Mylan-Biocon (monoclonal antibodies).

Fig. 39: List of US Biosimilars marketed or under development

Source: Nomura

US definition of biosimilars very different from other countries

The US definition of biosimilars differs from that in other countries. There are two categories of biosimilars for purposes of approval. Biosimilars of reference biologics developed in the US during the 1970s-80s − ie, hormones (follicle-stimulating hormone, luteotropic hormone, calcitonin, insulin, growth hormone), specific enzymes (brand name: Cerezyme), and anticoagulants (PEG-Hirudin) − that were approved under the Food, Drugs, and Cosmetics Law follow the same approval pathway as generic low molecular weight compounds. However, antibody therapeutics and most protein therapeutics fall under the Public Health Services Law, which currently does not include a legal regulatory pathway for approval of biosimilars. Consequently, biosimilar

developers are required to submit biologics license applications (BLA) − the same process for new biologics. This requires costly large-scale studies.

“Obamacare” and the one-year market exclusivity of biosimilars Generic Nam e

Brand name/

Developm ent Code Approval date Manufacturer

Glucagon GlucaGen 1998 Novo Nordisk

Tev-tropin 2005 Teva/Ferring Pharma

Omnitrope 2005 Sandoz GmbH

Amphadase 2004 Amphastar

Hylenex 2005 Baxter

Calcitonin Fortical Nasal Spray 2005 Upsher-Smith/UNIGENE Neutroval 2010 BLA

b i i

Teva MK-4214 2009 Phase I Merck (Insmed)

Erythropoietin - 2010 Phase I Hospira

rFSH - Preclinical Watson Pharma/Itero

Biopharmaceuticals taliglucerase alfa UPLYSO PDUFA 2011-Feb Pfizer/Protalix Biotherapeutics galactosidase PRX-102 Preclinical Protalix Biotherapeutics Merck (Insmed) Pegylated Erythropoietin MK-2578 2010 Dropped Merck 2009 Phase I rhGH Hyaluronidase Filgrastim(G-CSF) Pegylated Filgrastim MK-6302

approval of biosimilars after makers of the original biologic have had 12 years of patent exclusivity. The law also mentions a one-year market exclusivity for biosimilars that are filed first in the United States, similar to first-to-file small-molecule generics.

Update on the US Guideline Situation: November 2010 discussion

In November 2010, the FDA hosted a public hearing to debate the issues involved in creating an approval pathway for biosimilars. Opinions on the biosimilar approval process were offered by a number of industry participants, including major branded drug makers, leading generic drug makers, universities and state-run research institutions, and consulting firms.

The bulk of comments concerned the respective definitions of “biosimilarity” (highly similar to the reference product notwithstanding minor differences in clinically inactive components) and "interchangeability" (can be expected to produce the same clinical result as the reference product in any given patient), and clinical trial requirements. Branded drug makers demanded head-to-head comparisons between branded drugs and biosimilars, and stressed that even if a biosimilar had been approved for one indication, it must undergo separate trials to obtain approval for another. Generic drug makers, on the other hand, pointed out that even branded drugs can undergo changes in chemical composition. They said that if scientific evidence proves biosimilarity, then additional indications should be automatically approved, as should interchangeability between the biosimilar and branded drug. In addition, some drug makers said there were ethical issues with calling for unnecessary clinical trials.

As a follow up to the November public hearing, on 9 May 2011, the FDA issued a notice requesting stakeholders for inputs on the development of the user fee programme for biosimilars and interchangeable biological products. According to the notice, the proposed fee for interchangeable biosimilars using the abbreviated biologics pathway will be the same as that of the biologics license application (BLA). The FDA estimates that the cost of reviewing biosimilar applications would be comparable to that of original biologics. The proposed fee structure also takes into account that biosimilar application reviews would be complex, technically demanding and resource intensive. The FDA has stated that the annual fee during the IND phase of each application would be

approximately USD150,000. We believe that this cost structure presents a high entry barrier and highlights the fact that entry into the US market will neither be easy nor inexpensive. The FDA is also expected to issue a first wave of biosimilar regulatory guidelines by the end of 2011.

Scientific evidence is the key term for US biosimilar approval

In our view, the key phrase to emerge out of the public hearing is “scientific evidence.” The issues arising at the tail end of the development process— such as the need for clinical trials and interchangeability or lack thereof with the branded drug—in our view all boil down to proving, with a high degree of scientific evidence, that a biosimilar is equivalent to the reference drug. In that sense, we think FDA documents concerning generic enoxaparin sodium, approved on 23 July, provide a blueprint for the biosimilar approval process.

Enoxaparin: a template for biosimilar approval

Enoxaparin sodium is a type of low molecular weight heparin, and is a highly complex polysaccharide polymer. Momenta Pharmaceuticals (MNTA) had conducted a

sophisticated analysis of the drug’s chemical composition prior to submission of generic approval (ANDA). The FDA granted approval on the premise that equivalence had been determined. Protein preparations and antibody therapies are even more complex in composition than polysaccharide polymers, but we think the requirements for scientific evidence and subsequent approval should be limited to proving, via sophisticated testing, that any change in the biosimilar’s chemical composition is within the scope found in the original branded drug.

Clarity needed for progress

At present, there are two approval pathways for biosimilars in the US – the traditional Biologics License Application (BLA) route and the in-progress Abbreviated BLA route. Companies such as Teva and Hospira have chosen to take the tried and tested BLA route for their G-CSF biosimilars citing the uncertainties that surrounds the ABLA route.

Hospira is conducting Phase I clinical trial for biosimilar erythropoietin in renal patients with the objective of testing the safety and pharmacokinetics in comparison to the original product. Pending the successful completion of the Phase I trial, Hospira aims to launch an expanded Phase III trial in 2011. Pharmaceutical companies believe that taking the ABLA route for biosimilar approval will expose them to extensive patent litigations and delays in launching biosimilars. According to Medco, a leading pharmacy benefit managers, companies will develop biosimilars for the US market with or without the ABLA as they would be able to make use of the traditional BLA route. Through its discussions with manufacturers, Medco has learnt that biosimilars in the US could be priced at a 30-60% discount to the original biologics. The company expects biosimilar penetration in the US to be driven by oncology and rheumatoid arthritis.

Celltrion’s sales in US discounted by 50% to account for lack of clarity While we believe that Hospira will develop biosimilars in the US, the timing and the competitive situation is currently very unclear. Conservatively, we have estimated launch of both CT-P05 and CT-P10 in 2016 – well past the US patent expiry of 2012 for Enbrel and 2015 for Rituxan – to reflect the lack of clarity in guidelines and approval process. We estimate that Hospira will gain 10% of the market share by volume in the first year, resulting in USD360mn for CT-P05 and USD160mn for CT-P10. We have, however, applied a 50% discount for Celltrion’s sales to account for the large uncertainty. Fig. 40: US patient population assumptions and end market sales forecast 2010-2020

Source: Nomura estimates

Gaining FTF for biosimilars would be very large, but not included in forecast Simulation of a scenario in which Hospira gains first-to-file status for both CT-P05 and CT-P10 are shown in the table above. Because the market is large, Hospira could stand to gain considerably from such a scenario. We have not included this scenario in our forecast, due to uncertainties.

CT-P13 and CT-P05: US assumptions 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

Baseline Forecast ($ mn) 8,018 8,126 8,332 8,397 8,271 8,184 8,184 8,184 8,184 8,184 8,184

Baseline Calc. Patient Pop. 308,300 305,900 305,600 303,500 294,800 288,000 288,000 288,000 288,000 288,000 288,000

Biosimilar Market Creation Effect 0 0 0 0 0 0 0 0 0 0 0

Total Patient Pop. After Biosimilar Launch 308,300 305,900 305,600 303,500 294,800 288,000 288,000 288,000 288,000 288,000 288,000

CT-P13/P05 Penetration by Patient Pop. (%) 0 0 0 0 0 0 10 8 6 6 6

Estimated End Market Sales ($ mn) 0 0 0 0 0 0 359 287 215 215 215

CT-P13/P05 Penetration FTF 1-yr exclusivity (%) 0 0 0 0 0 0 20 8 6 6 6 Estimated End Market Sales FTF 1-yr ($ mn) 1,006

CT-P10: US assumptions 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

Baseline Forecast ($ mn) 2,901 3,057 3,155 3,249 3,347 3,447 3,551 3,657 3,767 3,880 3,958

Baseline Calc. Patient Pop. 103,612 109,169 114,968 120,834 126,999 133,478 140,288 147,446 154,969 162,875 186,515

Biosimilar Market Creation Effect 0 0 0 0 0 0 0 0 0 0 0

Total Patient Pop. After Biosimilar Launch 103,612 109,169 114,968 120,834 126,999 133,478 140,288 147,446 154,969 162,875 186,515

CT-P10 Penetration by Patient Pop. (%) 0 0 0 0 0 0 10 8 5 5 5

Estimated End Market Sales ($ mn) 0 0 0 0 0 0 159 131 85 87 99

CT-P10 Penetration FTF 1-yr exclusivity (%) 0 0 0 0 0 0 40 8 5 5 5 Estimated End Market Sales FTF 1-yr ($ mn) 893