Q1 2018 Earnings Roundup: Biosimilars Update

Over the past few weeks, numerous biologics and biosimilar companies released their quarterly earnings for Q1 2018 and held related earnings calls.  Below are some highlights:

  • On April 17, Johnson & Johnson (J&J) reported a 22.5% year-over-year (YOY) decline in U.S. sales of Remicade® (infliximab), which it attributed “to increased discounts/rebates, biosimilar competition and  one-time rebate adjustment.”  According to Joseph Wolk, Vice President, Investor Relations, U.S. sales figures for Remicade® were “negatively impacted by a prior period pricing adjustment related to a major payer’s delayed submission of rebate claims” and “[e]xcluding this adjustment, REMICADE’s decline would have been close to the 16%, largely driven by price erosion as REMICADE has retained better than 95% of its volume share.”  J&J’s Executive Vice President and Chief Financial Officer, Dominic Caruso, added that “we don’t expect that that particular phenomenon is going to continue throughout the balance of the year, so the normalized erosion 16% is then therefore pretty consistent with what we expected.”
  • On April 19, Novartis reported a “strong performance of biosimilar launches in Europe” by Sandoz, “mainly driven by Rixathon (rituximab) and Erelzi (etanercept) sales in Europe.”  According to Novartis’ presentation, Sandoz remains on-track to resubmit its aBLA for its pegfilgrastim biosimilar candidate (LA-EP2006) in early 2019, and expects to complete its Phase 3 oncology trial for its biosimilar rituximab candidate (GP2013) this quarter.
  • On April 24, Biogen reported a 93% YOY increase in revenues from its biosimilar products, and “continued steady market share gains across the large European markets.”  During Biogen’s earnings conference call, Chief Financial Officer Jeff Capello stated that, “[i]n addition to a continued expected uptick for BENEPALI [etanercept biosimilar], we believe the expected launch of IMRALDI [adalimumab biosimilar] in October this year will be an additional growth driver for our Biosimilars business going forward.”  As we reported last month, Samsung Bioepis, Biogen’s joint venture with Samsung Biologics, entered into a global settlement agreement with AbbVie that allows Imraldi to be launched in most countries in the European Union beginning on October 16, 2018. Biogen also reported that it plans to exercise its option to acquire up to a 49.9% equity stake in Samsung Bioepis, which Mr. Capello described as “an attractive value creation opportunity.”
  • Also on April 24, Amgen reported sales declines for several biologic products that are facing biosimilar competition currently or in the future. For Neupogen® (filgrastim), Amgen reported a 30% YOY decline in net sales worldwide (-36% in U.S.).  Tony Hooper, Head of Global Commercial Operations, added on the earnings call that “we continue to compete effectively holding just under 40% market share of the short acting market in the U.S., as we exit quarter one.  This is after four plus years of facing competition.”  For Neulasta® (pegfilgrastim), Amgen reported a 5% YOY decline in global net sales (-4% in U.S.), which it attributed to a slight decline in myelosuppressive chemotherapeutic agents.  For Enbrel® (etanercept), Amgen reported a 6% YOY decline in global and U.S. net sales and indicated that it is expecting a decline in net selling price for this product in 2018 compared to 2017. For Epogen® (epoetin alfa), Amgen reported a 10% YOY decline in net sales, which it primarily attributed to a lower net selling price.  With regard to Amgen’s biosimilars program, Amgen executives highlighted that its trastuzumab biosimilar candidate, Kanjinti™ (ABP 980), received a positive CHMP opinion for marketing authorization in Europe, as we reported back in March, and has a FDA target action date of May 28, which will be Amgen’s “next opportunity for approval” in the United States.
  • On April 26, Biocon reported that it and Mylan “have agreed to expand their long-standing collaboration to add two new next-generation biosimilar programs with Insulin Glargine 300 units/mL and Pertuzumab.  This will bolster our existing global biosimilars portfolio comprising antibodies & insulin analogs.”  In an investor presentation last month, Mylan identified these two biosimilars (or follow-on biologics) of Toujou® and Perjeta® as the 10th and 11th products in its biosimilars collaboration with Biocon and indicated that these candidates were in cell line development and preclinical development, respectively.
  • Also on April 26, 2018, AbbVie reported a 10.7% increase in global sales of a Humira® (operationally, excluding a 3.7% favorable impact from foreign exchange), including an 11.4% increase in the U.S. and 9.3% internationally.  In addressing AbbVie’s recent settlement with Samsung Bioepis and its prior settlement with Amgen last year concerning their proposed biosimilars of Humira®, Chairman and CEO Richard A. Gonzalez stated that “[w]e remain confident that we will not see direct biosimilar competition in the U.S. until at least 2022.”  Mr. Gonzalez also confirmed during the call that AbbVie is expecting an 18-20% decline in ex-U.S. Humira® sales next year, the bulk of which will likely occur between the fourth quarter of 2018 and the end of 2019, in light of anticipated biosimilar launches in Europe starting this October.
  • Also on April 26, Roche reported an increase in U.S. sales of 15%, led by Ocrevus®, Herceptin® and Perjeta®, but a 7% decline in European sales, which Roche attributed mainly to lower MabThera/Rituxan sales as a result of biosimilar competition. During Roche’s earnings call, CEO Severin Schwan highlighted the “different dynamics in Europe and the U.S.” and indicated that “as we go forward, we will see this trend to reverse.  As we on the one hand expect sales growth to moderate with the entry of biosimilars in the U.S., but on the other hand Europe will increasingly of course benefit from the new products as we start to launch them.”  Roche executives also indicated that they were expecting the first rituximab biosimilar entry in the U.S. in the second half of this year.
  • On April 27, Sanofi reported a decrease in European sales for several of its products, including Lantus® (insulin glargine) and Lovenox® (enoxaparin sodium) based, in part, on the availability of biosimilars in European markets.
  • On May 1, Pfizer reported quarterly worldwide sales of Inflectra® (infliximab-dyyb) of $145 million ($55 million in U.S.), up from $78 million ($17 million in U.S.) in the same quarter last year, shortly after the biosimilar product’s U.S. launch.  During the earnings call, COO Albert Bourla stated that Pfizer is “very encouraged by the words of FDA and other people in Trump’s administration” about advancing new policies to try and stimulate more biosimilar development, but noted that biosimilars penetration for infliximab was 56% in Europe, but only a 6% share in the U.S., “so there is something wrong with that.”  With respect to the FDA’s Complete Response Letter (CRL) that Pfizer recently received for its proposed trastuzumab biosimilar, Mr. Bourla described it as “unexpected” and noted that “FDA was asking [for] additional technical information clarifications” that they “didn’t think … would come to a Complete Response Letter.”  Mr. Bourla reiterated Pfizer’s prior representation that FDA’s questions “were not related either to safety nor to clinical data submitted. And they had nothing to do with – pertaining to our manufacturing abilities.”  Further, Mr. Bourla stated that “at this time we do not anticipate that the FDA action will have any impact on our plans to launch of trastuzumab. We think that we will be able to respond to these queries and get it approved before our projected launch date.”   Overall, Pfizer reported growth in its biosimilars business.  Chairman and CEO Ian Read stated that Pfizer’s “[r]evenues from our biosimilars business grew 53% operationally in the quarter to $173 million. We expect to broaden our biosimilars portfolio in the U.S. by potentially bringing five biosimilars to the market in the next two years.”
  • Also on May 1, Merck & Co. (Merck Sharp & Dohme) reported a 27% YOY decline in ex-U.S. sales of Remicade® ($167 million vs. $229 million), particularly due to biosimilar competition in Europe.  Merck markets Renflexis® (infliximab-abda), a biosimilar of Remicade®, in the United States, but did not report quarterly sales data for that biosimilar.
  • On May 8, Momenta provided updates regarding three products in its biosimilar pipeline.  First, Momenta reiterated that its aBLA for M923, a proposed biosimilar of Humira® (adalimumab), is prepared to be filed with the FDA, but it is “holding off on filing pending conclusion of our business development discussions.”  The timing of filing “is dependent on the outcome of the Company’s ongoing strategic review.” Momenta “expect[s] U.S. market formation in the 2022-2023 timeframe, subject to marketing approval and patent considerations[.]” Second, Momenta reported that it “plan[s] to start-up the pivotal clinical trial in patients in the first half of 2018” for M710, a proposed biosimilar of Eylea® (aflibercept) that it is developing in collaboration with Mylan.  According to President and CEO Craig Wheeler, “The trial will be a randomized, double-blind, active control, multi-centric study in patients with diabetic macular edema to compare the safety, efficacy and immunogenicity of M710 with EYLEA.”  For this biosimilar, Momenta “[e]xpect[s] U.S. market formation in 2023, subject to marketing approval and patent considerations.”  Third, with regard to M834, a proposed biosimilar of ORENCIA® (abatacept) that Momenta is also developing in collaboration with Mylan, Momenta reported that they “continue to investigate” the results of a Phase 1 study in which “M834 did not meet its primary pharmacokinetic (PK) endpoints” and that “[n]ext steps [will] be determined upon completion of the investigation.” According to Mr. Wheeler, “We are in the process performing a comprehensive investigation into the potential reason of the PK results, which could be anything from assay variations to structural differences in our molecules.  Once we finalize the investigation, we will look at Mylan to determine next steps and provide an update as appropriate.”
  • On May 9, Mylan released its first quarter earnings. During its earnings call with investment analysts, Mylan executives responded to questions on the Form 483 with 7 observations that its partner Biocon received after an FDA inspection of its manufacturing facility in Bangalore and its potential impact on the FDA action date of June 4, 2018 for its pegfilgrastim biosimilar candidate.  Mylan CEO Heather Bresch noted that Mylan still sees that biosimilar product as one of its “key launches for the year” and stated that “we have no changes to the expectations that we laid out at Investor Day.”  Mylan President Rajiv Malik explained that the Form “483 observations they received fall in the category of continuous improvement” and “are already being responded [to] as we speak[.]”  Mr. Malik further stated that “it doesn’t change our outlook about approval and launch of this product. And we also continue to prepare for the launch of this very important product.”
  • On May 10, Coherus provided updated guidance for 2018 regarding CHS-1701, its proposed biosimilar of Neulasta® (pegfilgrastim).  Coherus states that it anticipates that the FDA will accept its recently resubmitted BLA on or before June 3, 2018, and provide a target action date of November 3, 2018.  During Coherus’ earnings call, President and CEO Denny Lanfear referred to this biosimilar as “our lead asset” and commented that Coherus believes “our comprehensive clinical package as well as our excellent analytical biosimilarity data to support FDA approval of this product this year.”  Coherus states that it anticipates a U.S. commercial launch directly following the potential FDA action date, dependent on regulatory review and approval timing.  Mr. Lanfear remarked, “In the meantime, during the review process, we will continue building product inventory and establishing our commercial infrastructure to ensure a successful product launch…  Near-term inventory buildup is going to according to plan and we are preparing to support a vigorous launch after regulatory approval.  Longer-term, we believe about somewhere it may grow to 75% plus of new aftermarket over the first few years, consistent with this our geo experience in trajectory. We have plans in place to enable us to meet that level of demand even if we are the only biosimilar on the market.”  Mr. Lanfear also addressed Coherus’ recent district court victory in its BPCIA litigation against Amgen, stating that “[w]e believe this successfully concludes the patent dance process for CHS-1701.”  With regard to its European application for CHS-1701, Coherus reported that it anticipates a CHMP opinion on or before June 28, 2018, with potential approval following a few months later.  Coherus projects commercial partnering discussions to continue in 2018 for certain ex-U.S. territories.  Coherus also provided guidance for other biosimilar candidates in its pipeline, indicating that it plans to initiate clinical development of CHS-3351, its proposed Lucentis® (ranibizumab) biosimilar; continue preclinical development of its CHS-2020, its proposed Eylea® (aflibercept) biosimilar; and pursue manufacturing objectives in support of a BLA for CHS-1420, its proposed Humira® (adalimumab) biosimilar, as well as continue to develop partnering options pursuant to a 2022 launch.
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