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December 2009 Biobetters – major players and market prospects A FirstWord Market Intelligence Report

December 2009

Biobetters – major players and market prospects

A FirstWord Market Intelligence Report

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Contents

Executive Summary

1

Biosimilars and the High Demand for New Biological Drugs

2

Biological Drugs

2

Table 1: Commercially Important Biological Drug Types

2

Biological Drug Market Growth

3

Biosimilars

3

Definition of Biosimilars

3

Biosimilar Regulatory Update

3

Follow-On Protein Products in the US

4

The Biosimilar Market

4

Biobetters

5

Possible Repercussions of Biosimilars

5

Combating Biosimilars with Biobetters

5

What Are Biobetters?

5

Types of Biobetter

5

Table 2: Biobetter Drug Design Techniques

6

Challenges in Biobetter Development

7

Innovator Research and Development Strategies

7

Rise of the Biobetter

7

Current Biological Research and Development Climate

7

Difficult Financial Climate for Smaller Biotechnology Companies

7

The Need for Differentiation

8

Active Comparator Clinical Trials

8

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Manufacturing Challenges

8

Biological Manufacturing

8

New Manufacturing Methods are Arriving…

9

…But Do Not Obviate the Need for Differentiation

10

Regulatory Hurdles for Biobetters

10

Patent Issues

10

Immunogenicity and Safety Fears

10

Data Exclusivity in the US

11

Marketing Challenges for Biobetters

11

The Challenge of Marketing Biobetter Drugs

11

Pricing and Reimbursement

12

Possible Increasing Biosimilar Competition

13

Biosimilar Price Reductions

13

Opinions of Thought Leaders on the Future of Biobetters

14

Biobetter Strategies

16

Monoclonal Antibodies

16

Biosimilar Monoclonal Antibodies

16

The Future for Biobetter Monoclonal Antibodies

16

Further Humanisation of Monoclonal Antibodies

17

Table 3: Biobetter Monoclonal Antibodies: Towards Fully Human

17

Additional Antibody Targets

18

Table 4: Biobetter Monoclonal Antibodies: Additional Targets

19

Antibody-Drug Conjugates

19

Antibody Fragments

19

Table 5: Biobetter Monoclonal Antibodies: Antibody Fragments

20

Glycoproteins

20

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Biobetter Pegylated Glycoproteins

20

Table 6: Biobetter Pegylated Glycoproteins

21

Biobetter Glycoproteins: New Technologies

21

Table 7: Biobetter Glycoproteins - New Technologies

22

Biobetter Glycoproteins: Improved Manufacturing

22

Erythropoietin Drugs

22

Granulocyte Colony-Stimulating Factor (G-CSF)

23

Interferons

23

Vaccines

24

The Vaccine Market

24

Biobetter Vaccines: New Delivery Methods

24

Table 8: Biobetter Vaccines - New Delivery Methods

25

Biobetter Vaccines: New Technologies

25

Table 9: Biobetter Vaccines - New Recombinant Technologies

25

Table 10: Biobetter Vaccines - New Adjuvants

25

Table 11: Biobetter Vaccines - New Manufacturing Technology

26

Biobetter Vaccines: More Strains

26

Table 12: Biobetter Vaccines - Broader Spectrum of Activity

26

Protein Hormones

27

The Insulin Market

27

Novel Formulations are the Key Biobetter Opportunity

27

New Insulin Delivery Methods

27

Dermatological Insulin

28

Oral Insulin

28

Inhaled Insulin

28

Table 13: Biobetter Insulin Devices

29

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Biobetter Growth Hormones and other Hormones

29

Other Biological Drugs

29

Table 14: Other Biobetter Examples

29

Leading Biobetter Companies

30

Who are the Biobetter Leaders?

30

The Biobetter Strategists

30

Novo Nordisk

30

Merck & Co

31

The Bioleaders

32

Roche Group

32

Biogen Idec

33

Amgen

33

Sanofi-Aventis

33

Eli Lilly

34

Other Large Pharmaceutical Companies

34

GlaxoSmithKline

34

Novartis

35

AstraZeneca

35

Pfizer

36

Conclusion

37

Abbreviations

39

Index

40

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Executive Summary

The earliest, or first-generation, biological drugs now have patents that have expired or are about to expire. These patent expiries, coupled with rising healthcare costs, have created an expectation for the future availability of biosimilars, similar to that of generic small-molecule drugs. Biosimilars have arrived already in many jurisdictions and there is a distinct possibility for a rapid growth in the biosimilar market in the coming years.

Innovator pharmaceutical companies can use biobetters to compete with biosimilars. First-generation biological drugs are largely immediate-release formulations, delivered by subcutaneous injection or infusion. Second-generation, or biobetter, versions of these drugs are modified by various biochemical means in order to improve their efficacy, reduce dosing frequency, reduce immunogenicity, improve the side-effect profile, or provide some other competitive advantage.

Biobetters generally have lower early-stage research and development costs. To be successful, however, they will need to have a clear competitive edge, in the form of clinical superiority or greater ease of use. Only these clearly differentiated biobetters will be successful in competing with biosimilars and gaining adequate reimbursement from payers.

This report examines biobetter strategies for the leading types of biological drug, including monoclonal antibodies, glycoproteins, vaccines and hormones and identifies where the key opportunities for biobetter drug development lie. In addition, the article looks at the current state of biobetter development in leading pharmaceutical companies and examines possible future strategies for these companies.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Biosimilars and the High Demand for New Biological Drugs

Biological Drugs

With annual revenues currently in excess of US$120 billion, biological drugs are an important sector of the pharmaceutical market. Biological drugs also known as biopharmaceuticals or biologics contain an active agent made or derived from living organisms. Although some are obtained from natural sources, most are manufactured using recombinant DNA technology.

Commercially, monoclonal antibody therapies are the most important class of biological drug, with annual revenues in excess of $30 billion (Table 1). Glycoproteins (proteins with attached sugars) and vaccines are the next two most important biological drug classes, each having annual revenues of around $25 billion. Glycoprotein drugs with highest sales revenues are recombinant forms of erythropoietin (epoetin), various interferons and recombinant granulocyte colony-stimulating factor (G-CSF) (types include filgrastim and lenograstim).

Annual global revenues for protein hormones mainly recombinant forms of insulin for patients with diabetes and recombinant human growth hormone (somatropin) are roughly $15 billion. Other commercially important biological drugs include fusion proteins and heparins.

Table 1: Commercially Important Biological Drug Types

Biological Drug Type

Details

Monoclonal antibodies

Antibodies manufactured from a single DNA sequence, for the treatment of a variety of cancers and autoimmune disorders

Glycoproteins

Glycoprotein hormones and cytokines (cell-signalling proteins), such as:

Erythropoietin, used to control red blood cell production in patients with anaemiahormones and cytokines (cell-signalling proteins), such as: Interferons, used for hepatitis C and multiple sclerosis

Interferons, used for hepatitis C and multiple sclerosis treatmentG-CSF, used for the stimulation of white blood cells in oncology

G-CSF, used for the stimulation of white blood cells in oncologyInterferons, used for hepatitis C and multiple sclerosis treatment

Vaccines

Denatured micro-organisms, or recombinant proteins, for disease prophylaxis

Protein hormones

Simple non-glycosylated hormones such as insulin and somatropin

Fusion proteins

Pfizer (formerly Wyeth) and Amgen’s Enbrel (etanercept) for rheumatoid arthritis is the main example of this class of drug, created by joining two or more proteins by fusing their coding genes

Heparins

Polysaccharides used for anti-coagulation

Others

Examples include enzymes, blood factors and fibrinolytic agents

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Biological Drug Market Growth

By most projections, biological drug use will grow more rapidly than that of small- molecule drugs. As the global population grows and ages, major diseases treated by biological drugs - particularly cancer and diabetes - are increasing in prevalence. Currently, expensive biological drugs for chronic diseases are confined largely to wealthy countries. However, biological drugs will increasingly penetrate emerging markets in Asia and South America, as incomes rise and chronic diseases become more common. As a result, large pharmaceutical companies are racing to fill their dwindling pipelines with biological therapies.

The earliest, or first-generation, biological drugs have patents that have expired or are about to expire. Examples include human insulin, the earliest recombinant forms of human growth hormone, erythropoietin, and many interferons. These patent expiries, coupled with the rising cost of already expensive biological drugs, have created an expectation for future availability of cheaper biological drugs, especially in the US. This expectation is centred on the future availability of ‘generic’ biological drugs, following the same model as that of generic small-molecule drugs.

Biosimilars

Definition of Biosimilars

Cheaper versions of patent-expired biological therapies are available already, in Europe and Asia. The European Medicines Agency (EMEA) defines these drugs as biosimilars:

drugs that are similar, but not identical, to a marketed biological drug (the reference drug), with the same active ingredient, doses and indications. The large size of biological drug molecules, the complexity of their manufacturing processes, their sensitivity to slight changes in this production process and their potential for immunogenicity (eliciting an immune response to the drug) mean that biosimilars are not completely identical to the reference drug. Therefore they cannot be regarded as true generic drugs.

Biosimilar Regulatory Update

Biosimilar medicines cannot gain regulatory approval using existing legislation intended for small-molecule drugs. The EMEA has introduced new legislation for the EU, which allows the approval of biosimilar versions of the simpler biological drugs, including protein hormones and glycoproteins. Unlike small-molecule generics, some clinical testing of the biosimilar is required, in order to show bioequivalence with the reference drug. Additionally, most European governments are not allowing automatic substitution of branded drugs with biosimilars at pharmacies, although this practice is common for small-molecule generics. Nevertheless, the EMEA has approved multiple versions of biosimilar recombinant growth hormones, erythropoietin and G-CSF.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Copies of biological drugs are also available in less-regulated Asian markets. Other countries, including Australia, have adopted the EMEA biosimilar guidelines. The Japanese regulatory authorities issued guidelines for biosimilars (termed ‘follow-on biologics’ in that country) in March 2009 and approved the first example, a somatropin, in June 2009. A biosimilar somatropin is also approved in Canada, although Health Canada has not yet issued final guidelines for the approval of what it terms ‘subsequent- entry biologics’.

Follow-On Protein Products in the US

In the US, however, there is no regulatory pathway in place for the approval of biosimilars. The structure of the US Food and Drug Administration (FDA) regulations allows the approval of a few simple biological drugs including somatropin through an abbreviated regulatory pathway. The approval of all other biosimilars will, however, require the creation of new legislation. The current US administration has indicated it supports introduction of this legislation and two such bills were introduced to the House of Representatives in March 2009. However, the FDA is unlikely to be able to approve any biosimilars (commonly termed ‘follow-on protein products’ or ‘follow-on-biologics’ in the US) until 2013, at the very earliest.

The Biosimilar Market

Currently, the biosimilar drug market accounts for only around one percent of the total biological drug market and is largely restricted to less-regulated Asian markets. Biosimilars are likely to remain more expensive to develop than small-molecule generics, owing to the clinical testing requirements. Biosimilars are therefore unlikely to offer the same sharp price discounts achieved by generics. Additionally, the lack of substitution at pharmacies will mean high marketing costs.

Nevertheless, there is a distinct possibility for rapid growth in the biosimilar market in the coming years. This will become increasingly likely if a biosimilar regulatory pathway is implemented in the US. If biosimilars build a good safety profile in Europe and Japan over a number of years and this leads to introduction of automatic substitution in pharmacies, another boost to the biosimilar market will follow.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Biobetters

Possible Repercussions of Biosimilars

If lower-cost biosimilars become an established sector of the biological drug market in North America, Europe and Japan, what will be the repercussions? The major consequence is likely to be downward pressure on prices. Although biosimilars will not offer the large price reductions offered by small-molecule generics, even a modest undercutting of price will limit the pricing options for branded biological drugs. Further consequences of biosimilar competition could be a lowering of the commercial viability of biological drugs with smaller potential markets. Novel biological therapies for rarer diseases and personalised therapeutic approaches - which necessarily have a smaller potential patient pool - may be less viable when future biosimilar competition is expected to reduce revenues.

Combating Biosimilars with Biobetters

What Are Biobetters?

Whether or not biosimilars become established will be revealed over the coming years. There is no guarantee that biosimilars will become accepted, although some degree of biosimilar success is likely. However, there is one, often overlooked strategy that innovator pharmaceutical and biotechnology companies can use to compete with biosimilars: ‘biobetters’.

First-generation biological drugs are largely immediate-release formulations, delivered by subcutaneous injection or infusion. These injected biological drugs can be modified by various biochemical means in order to improve their efficacy, reduce dosing frequency, reduce immunogenicity, improve the side-effect profile, or provide some other competitive advantage. In this article, second-generation drugs produced using such principles will be termed ‘biobetters’.

Types of Biobetter

Techniques for developing biobetters involve engineering the protein structure of the drug. Engineering can entail the alteration of the amino acid sequences or the glycocomponent of a glycosylated protein, or the attachment of proteins or other chemicals such as polyethylene glycol (PEG: pegylation).

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Design techniques for second-generation biologicals are grouped into four types, depending on their purpose (Table 2). Novel biobetter formulations allow alternative and more convenient dosage formats, potentially leading to improved patient compliance.

Table 2: Biobetter Drug Design Techniques

Technique

Description

Suitable Biological Drug Types

New formulation

Development of controlled-release, subcutaneous injection, oral, dermatological or inhaled formulations

All biological drugs

Engineering to

Pegylation, albumin fusion or conjugation with carrier protein, in order to increase half life

Mainly glycoproteins, and simple hormones

produce longer-

acting drug

   

Engineering to

Protein engineering, glycosylation, addition of conjugates and adjuvants, design of antibody fragments and others

All biological drugs

improve drug

function

New manufacturing method

Development of microbial, insect and plant- based cell manufacturing systems

All biological drugs

Techniques to increase the half-life of a biological drug in the body can lead to reduced dosing frequency, improved bioavailability and reduced toxicity. Methods to achieve this include covalent conjugation with PEG (pegylation), which has already been proved to increase the half-life of drugs in the body. Other methods for increasing a drug’s duration of action include controlled-release formulations, fusion with human albumin serum and conjugation with fusion proteins.

A third design technique uses more radical protein engineering to alter the function and

clinical effectiveness of a biological drug. Examples include conjugating a monoclonal antibody with a cytotoxic agent, engineering a fragment of monoclonal antibody, re- engineering live or inactivated vaccines as recombinant vaccines and altering the glycosylation pattern of a glycoprotein in order to alter its pharmacokinetic properties.

A fourth technique is to improve the protein manufacturing system.

Of course, biobetters may be produced by combining a number of design techniques from the four available. For example, glycoengineering of a protein may both improve its efficacy and increase its half-life.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Challenges in Biobetter Development

Innovator Research and Development Strategies

Rise of the Biobetter

The expense of biological drug development, increasing competition from small-molecule drugs and other biological drugs for the same disease targets, the global financial crisis and the imminent threat of biosimilars are leading to increasing interest in the development of biobetters. These generally have lower early-stage research and development costs, and the developing company can choose an active or placebo comparator in clinical trials, depending on what is more suitable for their development strategy. However, clear superiority in clinical outcome or ease of use will be essential in successful future biobetter development strategies.

Current Biological Research and Development Climate

Biological drugs are much more expensive to develop than traditional small-molecule drugs. These higher costs must be recouped in higher selling-prices, which in turn can decrease the chances of obtaining satisfactory reimbursement from governments and healthcare providers. Biological drugs have been developed for many of the more common cancers and autoimmune disorders; the remaining targets often have lower patient populations, and are less commercially attractive. Often multiple drugs are in development in a crowded biological drug pipeline for these remaining targets.

Furthermore, if lower-cost biosimilars become established in major markets, they could precipitate price reductions among all competitor drugs in a given class. Competition from small-molecule drugs is increasing in some categories, such as the erosion of sales of Roche’s breast cancer monoclonal antibody Herceptin (trastuzumab) by GlaxoSmithKline’s (GSK) Tykerb (lapatanib).

Difficult Financial Climate for Smaller Biotechnology Companies

The challenge of biological drug development is being heightened by today’s more difficult financial climate. The current global economic crisis is causing a drought in funding for smaller biotechnology companies, which require large amounts of capital. As a result, the established trend of large pharmaceutical companies licensing biological pipeline products and acquiring smaller biotechnology companies is likely to accelerate.

Smaller biotechnology companies need funding for late-stage development and marketing expertise. Large pharmaceutical companies need to buy innovation to fill thin pipelines. It is true that these larger pharmaceutical companies are merging, reducing in number and becoming more risk-averse. In the longer term, however, declining funds

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

for research and development in larger pharmaceutical companies should maintain their interest in acquiring pipeline biological drugs from external sources.

The Need for Differentiation

As large pharmaceutical companies search the market for innovative biological technology and biological therapies to fill their pipelines, those most likely to attract their attention are candidates that allow clear differentiation from first-generation products. Examples include biobetters that are longer-acting versions of existing blockbuster biological drugs in a late stage of development, and technology platforms or delivery devices offering improved formulations. Such options will be particularly attractive for marketers of first-generation biologicals nearing the end of their patented period and requiring a follow-on version.

The need for differentiation will be paramount, if biosimilars become established in a particular section of the market. If this happens, there is likely to be downward pricing pressure on all drugs in that particular class and only drugs clearly clinically superior will escape the effect.

Marginal differentiation among novel branded biological entrants, such as a lack of clear clinical superiority or only marginally more convenient formulations, will leave them more vulnerable to biosimilar competition.

Active Comparator Clinical Trials

Currently the FDA and the EMEA do not require the use of an active comparator in trials conducted for the approval of a new drug, although developers often use them when it would be unethical to use placebo-controlled clinical trials (for example, for certain patients with cancer). In the near future, however, the use of active comparator trials is likely to become more common. With demonstrated clinical superiority of new biological drugs likely to become of critical importance, active comparator trials will be required to convince both pharmaceutical companies to license a drug and also healthcare providers to adopt and reimburse such therapies. The motivation for pharmaceutical companies to conduct comparative testing is likely to increase over time, as the marketplace demonstrates demand for this information.

Manufacturing Challenges

Biological Manufacturing

Biologicals are manufactured using complex manufacturing processes involving living cells. A majority of currently-marketed biological drug are manufactured in mammalian cells, although some simpler non-glycosylated biologicals are manufactured in

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Escherichia coli bacteria. Compared with small-molecule drug manufacture, mammalian cell line manufacturing requires more stages and more rigorous quality control, and there is greater possibility of contamination. The raw materials and cell lines required for manufacture may be subject to limited supply or be restricted by special regulations in multiple jurisdictions.

Inevitable minor variations in the biological manufacturing process - such as the purity of raw materials, the cell culture conditions or storage conditions - can cause a degree of heterogeneity in the final product. The manufacturing process defines a particular biological drug in a way not applicable to small-molecule drugs. For example, the process may subtly alter the three-dimensional and complex folding properties of the protein. The variability in glycosylation patterns inherent in mammalian cell culture manufacturing methods is a particular problem because it may cause variations in the immunogenicity or potency of the final product.

New Manufacturing Methods are Arriving…

Compared with older, first-generation biological drugs, biobetter manufacturers can take advantage of newer manufacturing methods. Newer manufacturing systems for the more complex, glycosylated biologicals include yeast, insect and plant cell-based systems. Compared with mammalian cell lines these systems tend to be simpler and produce higher yields of therapeutic proteins at lower cost. In addition, they have the potential to yield a much more homogeneous product in terms of glycosylation patterns. Yeast, bacterial and plant strains, engineered to eliminate immunogenic components and to better represent glycosylation patterns found in human proteins, are promising methods to replace mammalian cell lines. Additionally, antibody fragments, destined to join full- size monoclonal antibodies in usefulness as therapeutics, are particularly suitable for manufacture in microbial and yeast systems.

Another newer manufacturing method that may help in the development of competitive biobetters is the production of therapeutic proteins from the milk of transgenic animals (animals with an implanted gene for the therapeutic protein). This method may allow the production of high volumes of proteins at low cost. Also, in the field of monoclonal antibodies, antibody fragments may prove to be cheaper and easier to manufacture.

Many Indian and Chinese pharmaceutical companies have biological manufacturing technologies comparable with those in North America and Europe but with a lower unit cost. Asian manufacturing sites are increasingly complying with good manufacturing practice guidelines (GMP) and gaining FDA and EMEA approval. These sites offer the opportunity for the contract manufacturing of cheaper biobetters.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

…But Do Not Obviate the Need for Differentiation

Although these new manufacturing methods may reduce the production costs of a biobetter, this does not obviate the need for differentiation. This point is illustrated by Shire’s ill-fated erythropoietin, Dynepo (epoetin delta). In 2007, Shire launched Dynepo as a unique erythropoietin drug: the only one produced in human cells. However, partly because Dynepo was not sufficiently clinically superior to any of its competitors, sales were disappointing. Shire ceased commercialisation in 2008.

Regulatory Hurdles for Biobetters

Patent Issues

Biological drugs are protected by patent suites that protect not only the entire molecule or parts of it, but also humanisation techniques, production processes, methods of use and indications of use. These patents are more complex than those protecting small- molecule drugs. Additionally, the FDA does not maintain the listing of the patents related to biological drugs (again, unlike small molecules).

The decision to develop a biobetter version of an existing therapy will involve complex analysis of the expiry of patents, and even the outcome of litigation, that could affect the product. On the other hand, the complexity of biological drugs and the patents protecting them means that these patents may offer only partial protection. Biological drug patents may turn out to be easier to circumvent than those on small-molecule drugs, e.g. by making a very small change in a protein, but preserving the core design.

Immunogenicity and Safety Fears

Future biobetter drug candidates are likely to face the challenge of increased regulatory concern over the safety and immunogenicity of biological drugs. It has long been known that biological drugs can cause immunogenicity. This involves the drug stimulating an immune reaction, resulting in the production of antibodies against the drug and unintended clinical consequences.

The concern of regulatory authorities has been exacerbated by recent immunogenicity issues affecting biological drugs. A well-known example is the sudden increase in reports of pure red cell aplasia (PRCA) in patients receiving subcutaneous injection of erythropoietin drugs during 1999-2002. Although the exact reasons remain unclear, it is now thought that leachates from the drug’s packaging served as immunological adjuvants causing immunogenicity and the adverse reactions.

No standard method for the preclinical screening of protein therapeutics for immunogenicity currently exists. In future, immunogenicity issues might be reduced by

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

greater use of predictive animal modelling, or by using computer models to avoid the inclusion of immunogenic portions of proteins early in drug development. For the foreseeable future, however, immunogenicity remains a primary safety concern for regulators, who are likely to insist on stringent post-marketing monitoring programmes and risk management strategies for new biobetters. Rarer immunogenic effects can only be detected and assessed when large numbers of patients have been treated with a product.

The need for extended pharmacovigilance will be reinforced by other safety fears affecting biological drugs. These include the increase in progressive multifocal leukoencephalopathy in patients with multiple sclerosis taking Biogen Idec and Elan’s Tysabri (natalizumab) and fears of increased risk of cancers and cardiovascular conditions in patients taking anti-TNF (tumour necrosis factor) biological therapies.

Data Exclusivity in the US

The introduction of a pathway for biosimilars in the US is likely to be coupled with introduction a period of data exclusivity for innovative biological drugs. Indeed, the length of this data exclusivity period is the main issue holding up the introduction of biosimilar legislation. Groups representing generic pharmaceutical manufacturers are calling for a much shorter data exclusivity period than groups representing companies relying on innovative biological drugs. However, the adoption of too short a period is likely to increase the difficulty for pharmaceutical companies of recouping their investment in the research and development costs of new biological drugs. This will discourage the development of biobetters and favour biosimilars.

Marketing Challenges for Biobetters

Biobetter drugs will face an increasingly challenging market environment in the coming years. Future biosimilar competition will exacerbate the difficulty in obtaining adequate reimbursement from governments and healthcare providers. Demonstrated clinical superiority, and innovative marketing techniques, are likely features of the commercially successful biobetters of future years.

The Challenge of Marketing Biobetter Drugs

Although biobetter drugs may benefit from lower early-stage research and development costs than novel biological drugs, generally they will have all the marketing costs associated with novel biological drugs. Options for marketing biological drugs are often more limited and more time-consuming than for conventional small-molecule drugs. These drugs are typically marketed to hospital-based specialists and require a more scientific, data-driven marketing campaign.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

The marketing of biobetters will require traditional methods of drug marketing, including direct contact with physicians through representation, samples, direct advertising and sponsorship of education. Additionally biobetters must be marketed to consumers, and third-party payers through sponsorship, advertising and media releases.

Biobetters will often be marketing to patients with chronic conditions such as multiple sclerosis, diabetes or rheumatoid arthritis. These patients tend to be well informed about their condition. Biobetter marketing to these patients will increasingly require sophisticated and personalised approaches, such as use of Web2.0 marketing approaches, rather than broader-based techniques such as direct-to-consumer advertising (in the US and New Zealand). This personalisation will help biobetters to compete against established market incumbents.

Pricing and Reimbursement

The challenge of gaining adequate reimbursement for biological drugs is likely to increase in the coming years. Biological drugs are increasingly subjected to rigorous health economic assessments, such as those conducted by centralised government bodies, including the National Institute for Health and Clinical Excellence (NICE) in the UK. The NICE has rejected a number of biological therapies as not cost-effective by their criteria. This initially included Roche and Novartis’ Lucentis (ranibizumab) for age-related macular degeneration, although this decision was later reversed.

In other countries, such as the US or France, reimbursement for biological therapies has been much more generous. However this may not continue for much longer. In the US, the world's largest market for biological therapies, the current administration is intent on healthcare reform. Apart from the introduction of a regulatory pathway for the future approval of biosimilars, an effort to reduce healthcare costs is likely to put downward pressure on all biological drugs in the US.

Newer biological therapies experience more access restrictions when payers do not value the incremental clinical benefit offered by the treatment. This illustrates that innovation in itself will not be sufficient for a biobetter. Payers must be convinced of real clinical benefit, such as life extension rather than mere life improvement.

To combat future pressures on healthcare spending, biobetter manufacturers are likely to employ innovative strategies. Returning to the case of Lucentis in the UK gives a recent example. Novartis, which markets it in the UK, has struck an agreement with the UK National Health Service (NHS), whereby the NHS funds the initial injections of Lucentis, but Novartis covers the cost of the drug beyond 14 injections.

Other possible techniques that biobetter manufacturers may use to gain reimbursement include annual price caps for a therapy, help with patients’ co-payments where these

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

exist, lowering costs to the current standard of care and payment for only the first portion of a treatment.

Possible Increasing Biosimilar Competition

Currently the EMEA is of the opinion that healthcare practitioners must decide if a biosimilar is substituted for an innovator’s reference drug. Most European states have banned automatic substitution of biosimilars for branded biological drugs in pharmacies. Similarly in the US, the FDA does not hold the opinion that follow-on biologicals, approved through an abbreviated pathway, are equivalent to branded versions.

It is uncertain whether the automatic substitution of biosimilars will ever become common. If patients and healthcare practitioners accept biosimilars and automatic substitution becomes common, this will boost biosimilars considerably and provide strong competition for biobetter manufacturers. A factor already favouring biosimilars is that regulations in Europe do not require biosimilars to have a unique international non- proprietary name (INN), which would aid possible future automatic substitution.

Biosimilar Price Reductions

What will be the effect of increasing biosimilar market penetration? If biosimilars become an established sector of the pharmaceutical market in both North America and Europe, as seems distinctly possible, this is likely to lead to price reductions. This will not match those reductions achieved by small-molecule generics, owing to the higher manufacturing, clinical testing and marketing costs of biosimilars. Estimates vary, but analysts typically envisage biosimilars retailing at a 10-25 percent reduction, compared with innovator drugs. This is likely to lead to a corresponding downward pressure on the prices of all biological drugs in a particular class.

Unless biobetters are clearly demarcated as clinically superior they could struggle in the face of this biosimilar price-reducing effect. Even when a biobetter is markedly clinically superior, the scope for price rises immediately after launch - in an attempt to recoup revenues lost to future biosimilar competition - will be limited, owing to the already high price of biological drugs.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Opinions of Thought Leaders on the Future of Biobetters

To gauge current opinion, a number of thought-leaders were interviewed. They are involved in the development of improved monoclonal antibodies, glycoproteins, vaccines and insulin. Their opinions on the future direction of biobetter development in these fields are reproduced below. Areas that experts identified as areas favourable for biobetter development included antibody-drug conjugates, adjuvated influenza vaccines and oral formulations of interferons and insulin.

In the monoclonal antibody field, Dr. Frank Osterroth, Senior Vice President Biotherapeutics, Biotest (Germany) is of the opinion that antibody-drug conjugates will achieve future success:

‘After the success of monoclonal antibodies in the improvement of both efficacy as well as tolerability in rheumatoid arthritis and other autoimmune diseases compared to the conventional DMARDs [disease-modifying anti-rheumatic drugs], I believe monoclonal antibodies will continue to increase their position in cancer indications. I expect numerous new monoclonal antibodies and immunoconjugates to deliver a high value to patients both as monotherapy and in combination with already established chemotherapies. Patients with cancers that are refractory to conventional therapies will profit most from these new agents. The next important example might be Genentech’s trastuzumab conjugated with DM1 for the treatment of refractory forms of metastatic breast cancer.’

For vaccines, David S Fedson MD, former Professor of Medicine, University of Virginia School of Medicine and former Director of Medical Affairs, Aventis Pasteur MSD (now Sanofi Pasteur MSD), believes that influenza vaccines will be of key future importance, and that cell culture manufacturing methods and novel adjuvants will be the two most important methods for improving existing influenza vaccines:

‘The only industrial capacity the world will have for manufacturing influenza vaccines over the next few years will be the egg-based facilities currently found in the producing countries. There is not going to be a real increment in vaccine production capacity until cell culture facilities come online in late 2011 and 2012. Until then we will be stuck with existing systems. It would be possible to produce a larger number of doses of pandemic vaccines - and this would translate into sales for vaccine companies - if there were broad agreement on producing antigen-sparing adjuvated vaccines.’

Nadav Kidron, Chief Executive Officer, President and Director, Oramed (Israel) believes novel insulin formulations offer the greatest potential for improvements over existing therapies:

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

‘I see the greatest clinical and commercial opportunities in improving insulin-based drugs in the development of an oral insulin capsule. Firstly an oral insulin capsule would help improve the compliance rate. Secondly and the most important difference is that an oral insulin capsule mimics the natural physiological processes of the body and the insulin is delivered to the liver first and then the bloodstream.’

Biobetter oral formulations also have potential in the interferon sector, according to Dr. Joseph M. Cummins, founder and Chief Executive Officer, Amarillo Biosciences:

‘I believe that every clinical condition that is treated with high dose injectable interferon can be treated with low-dose oral interferon without the toxicity. Recombinant interferon has been used orally with success in animals and man.’

In the following section, these biobetter strategies are explored more fully, for each of the major types of biological drug.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Biobetter Strategies

The key strategy for biobetter developers is differentiation from first-generation biological drugs. How much differentiation will be required and which technologies will allow the development of commercially viable biobetters in the different biological drug types? This section examines possible future strategies.

Monoclonal Antibodies

Biosimilar Monoclonal Antibodies

The threat from biosimilar monoclonal antibodies in key European, North American and Japanese markets has not yet arrived. Nevertheless, biosimilar monoclonal antibody therapeutics are already available in India. Key US and European patents on the current largest-selling, first-generation monoclonal antibodies, Mabthera/Rituxan, Herceptin and Remicade, may expire before 2014, with Avastin following suit some years later. These drugs will be the prime targets for biosimilar manufacturers:

Roche and Biogen Idec’s Mabthera /Rituxan (rituximab), targeting CD20 and indicated for non- Hodgkin’s lymphoma and rheumatoid arthritis ’s Mabthera/Rituxan (rituximab), targeting CD20 and indicated for non-Hodgkin’s lymphoma and rheumatoid arthritis

Roche’s Avastin (bevacizumab), targeting vascular endothelial growth factor (VEGF) and indicated for a number of ’s Avastin (bevacizumab), targeting vascular endothelial growth factor (VEGF) and indicated for a number of cancers including colorectal, non-small cell lung and breast

Roche’s Hercepti n (trastuzumab), targeting HER2 and indicated for HER2-positive breast cancer ’s Herceptin (trastuzumab), targeting HER2 and indicated for HER2-positive breast cancer

Johnson & Johnson and Merck & Co.’s Remicade (infliximab), targeting TNF-alpha (Remicade rights were shared by Johnson & Johnson and Schering-Plough .’s Remicade (infliximab), targeting TNF-alpha (Remicade rights were shared by Johnson & Johnson and Schering-Plough prior to the November 2009 merger between Schering-Plough and Merck & Co. Arbitration is in progress to determine whether Johnson & Johnson or Merck gain control after merger.)

The Future for Biobetter Monoclonal Antibodies

Technology improvements, rather than new formulations, are likely to be the key means for producing biobetter monoclonal antibodies. These technologies are likely to include further humanisation of antibodies, increasing the number of targets to which antibodies bind, antibody-drug conjugates and antibody fragments.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Further Humanisation of Monoclonal Antibodies

A

key biobetter strategy in the monoclonal antibody sector of the biological drug market

is

likely to be re-engineering of monoclonal antibodies, with the aim of reducing their

immunogenicity or increasing their efficacy. The main technique for achieving this will be

reducing the proportion of murine sequences in monoclonal antibodies, and increasing the number of human sequences.

Older, chimaeric monoclonal antibodies (those containing both murine and human protein sequences) such as Mabthera/Rituxan and Remicade, will be replaced with humanised variants containing fewer murine sequences. Biobetter developers will

replace humanised monoclonal antibodies (such as Avastin and Herceptin) with fully human biobetters. This strategy is already underway and has been successfully employed by pharmaceutical companies. For example Abbott’s Humira (adalimumab) is

a fully human biobetter version of the chimaeric Remicade (Table 3).

Table 3: Biobetter Monoclonal Antibodies: Towards Fully Human

Biobetter

Description

Current Development Phase

Humira (adalimumab, Abbott)

Fully human monoclonal antibody targeting TNF-alpha Potential biobetter for Remicade (infliximab, Johnson & Johnson/Merck & Co.*)

Marketed

Simponi (golimumab, Johnson & Johnson/Merck & Co.)*

Fully human monoclonal antibody targeting TNF-alpha Potential biobetter for Remicade

Approved (US FDA and EMEA, 2009)

Motavizumab (AstraZeneca)

Humanised monoclonal antibody binding to RSV F Potential biobetter for Synagis (palivizumab, AstraZeneca/Abbott)

Submitted (US FDA, 2008)

Arzerra (ofatumumab, GlaxoSmithKline/Genmab)

Fully human monoclonal antibody targeting CD20 Potential biobetter for Mabthera/Rituxan (rituximab, Roche)

Approved (chronic lymphocytic leukaemia, US FDA October 2009); Phase III (non-Hodgkin’s lymphoma, rheumatoid arthritis)

Ocrelizumab (Roche/Biogen Idec)

Humanised monoclonal antibody targeting CD20 Potential biobetter for Mabthera/Rituxan

Phase III

RG7159 (Roche)

Humanised monoclonal antibody targeting CD20 Potential biobetter for Mabthera/Rituxan

Phase II

Veltuzumab

Humanised monoclonal antibody targeting CD20 Potential biobetter for

Phase II

(Immunomedics/Nycomed)

Biobetters -- major players and market prospects Biobetter Description Current Development Phase  

Biobetters -- major players and market prospects

Biobetter

Description

Current Development Phase

 

Mabthera/Rituxan

 

CD20 antibody (Eli Lilly)

Potential biobetter for Mabthera/Rituxan

Phase II

Ramucirumab/IMC1121B (Eli Lilly)

Fully human monoclonal antibody targeting VEGFR-2 Potential biobetter for Avastin (bevacizumab, Roche)

Phase III

Zalutumumab/HuMax-EGFr

Fully human monoclonal antibody targeting EGFR Potential biobetter for Erbitux (cetuximab, Eli Lilly/Bristol-Myers Squibb/Merck KGaA)

Phase III

(Genmab)

Necitumumab/IMC-11F8 (Eli Lilly)

Fully human monoclonal antibody targeting EGFR Potential biobetter for Erbitux

Phase II

VEGFR: vascular endothelial growth factor receptor; EGFR: epidermal growth factor receptor; TNF: tumour necrosis factor; RSV F: respiratory syncytial virus F protein

*REMICADE/SIMPONI rights were shared by Johnson & Johnson and Schering-Plough prior to the November 2009 merger between Schering-Plough and Merck & Co. Arbitration is in progress to determine whether Johnson & Johnson or Merck gain control after the merger

Additional Antibody Targets

Another technology improvement for existing monoclonal antibody therapeutics will be to increase the number of binding targets.

Trion is developing engineered monoclonal antibodies that are bispecific; that is, capable of binding to two different targets. This is achieved by combining the halves of two distinct full-sized antibodies, a tumour-specific mouse antibody and a T-cell specific rat antibody in one molecule. Trion’s Rexomun (ertumaxomab), currently in Phase II testing, is able to bind to the HER2 target in patients with breast cancer in a manner similar to that of Herceptin. However, as a bispecific antibody, Rexomun is also able to bind to T-cells, recruiting them in a second defence mechanism against the tumour.

Roche is investigating a novel monoclonal antibody, pertuzumab, for use in combination with Herceptin for patients with HER2-positive breast cancer. Pertuzumab inhibits the pairing of HER2 with other HER receptors, a key mechanism of tumour growth in patients with this type of breast cancer (Table 4).

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Table 4: Biobetter Monoclonal Antibodies: Additional Targets

Biobetter

Description

Current

Development

Phase

Pertuzumab in combination with Herceptin (trastuzumab, Roche)

Humanised monoclonal antibody acting as HER2 dimerisation inhibitor Potential biobetter for Herceptin alone

Phase II/III

Rexomun (ertumaxomab, Trion)

Bispecific antibody targeting HER2 Potential biobetter for Herceptin

Phase II

Antibody-Drug Conjugates

The strategy of further humanisation has already been employed for some antibody targets, but has not always resulted in great clinical benefit or reduced immunogenicity and side effects. Opportunities to increase the number of targets for particular monoclonal antibodies are limited. Companies are therefore investigating other techniques, including antibody-drug conjugates and fragments.

Antibody-drug conjugates are monoclonal antibodies linked to cytotoxic drugs or radioactive isotopes, designed to bind to, and destroy specific cancer cells. Some antibody-drug conjugates containing radioisotopes have already been launched, but have not enjoyed great commercial success. Antibody-drug conjugates are more challenging to design and manufacture than traditional monoclonal antibodies.

Nevertheless, biobetter conjugated versions of monoclonal antibodies are likely to achieve some future commercial viability. Antibody-drug conjugates have potential for significant therapeutic benefit, if they are capable of destroying cancer cells, rather than merely slowing their proliferation. Roche is currently conducting clinical trials of a conjugated biobetter version of Herceptin in collaboration with ImmunoGen. Trastuzumab-DM1 is a humanised antibody conjugated with the cytotoxic agent DM1, for the treatment of HER2-positive metastatic breast cancer. It is undergoing Phase II/III testing.

Antibody Fragments

Currently-marketed monoclonal antibody therapeutics are mostly full-sized antibodies, matching the size of naturally-occurring human antibodies. Fragments of monoclonal antibodies have significant future therapeutic potential because their smaller size may allow them to reach a host of targets unavailable to full-sized monoclonal antibodies.

Antibody fragments targeting the same receptors as older, full-sized monoclonal antibodies are also biobetter candidates. Such fragments offer the possibility for easier manufacturing in microbial systems and the potential advantage of greater tissue penetration. Certain antibody fragments have displayed increased stability and hence

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

potential for decreased dosing schedules or use in pulmonary or dermatological formulations.

Roche and Novartis’ Lucentis (ranibizumab) is a fragment of the parent monoclonal antibody Avastin, both of which target VEGF. Following the serendipitous discovery that Avastin was of use in treating age-related macular degeneration, Genentech (now Roche) developed Lucentis, specifically designed for ophthalmic applications. Other antibody fragments in development (Table 5) include those targeting TNF, which are hence potential biobetter versions of Remicade or Humira.

Table 5: Biobetter Monoclonal Antibodies: Antibody Fragments

Biobetter

Description

Current

Development

Phase

Lucentis (ranibizumab, Roche/Novartis)

Antibody fragment targeting VEGF, developed from Avastin

Marketed

Cimzia (certolizumab pegol, UCB)

Pegylated humanised antibody fragment targeting TNF-alpha Potential biobetter for Remicade

Marketed

ART621 (Arana)

Antibody fragment (domain antibody) targeting TNF Potential biobetter for Remicade

Phase II

ESBA105 (ESBATech)

Antibody fragment targeting TNF Potential biobetter for Remicade

Phase II

Glycoproteins

Carbohydrate groups are attached to many different proteins to form glycoproteins. The most commercially important of these are erythropoietin, G-CSF, α-interferon and β-interferon.

Biobetter Pegylated Glycoproteins

The most successful biobetter glycoproteins have been longer-acting, more-convenient pegylated versions of first-generation glycoprotein drugs (Table 6). Pegylated epoetin beta, G-CSF and α-interferon have enjoyed considerable commercial success, although market opportunities remain for pegylated β-interferon and improved pegylated formulations of all glycoproteins.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Table 6: Biobetter Pegylated Glycoproteins

Biobetter

Description

Current Development Phase

Mircera (methoxy polyethylene glycol- epoetin beta, Roche)

Pegylated epoetin beta Biobetter for NeoRecormon/Epogin (epoetin beta, Roche)

Marketed

Neulasta

Pegylated G-CSF Biobetter for Neupogen (filgrastim, Amgen)

Marketed

(pegfilgrastim,

Amgen)

 

Pegasys (peginterferon alfa- 2a, Roche)

Pegylated interferon Biobetter for Roferon-A (interferon alfa-2a, Roche)

Marketed

Pegintron (peginterferon alfa- 2b, Merck & Co. [formerly Schering- Plough])

Pegylated interferon Biobetter for Intron A (interferon alfa-2b, Merck & Co. [formerly Schering-Plough])

Marketed

PEG IFN

Pegylated interferon Possible biobetter for Avonex (interferon beta- 1a, Biogen Idec) or Rebif (interferon beta-1a, Merck KGaA)

Phase III

(peginterferon

beta-1a, Biogen

Idec)

Maxy-G34

Pegylated G-CSF Possible biobetter for Neupogen

Phase II

(pegylated G-CSF, Maxygen)

Biobetter Glycoproteins: New Technologies

In addition to pegylation, a range of other new technologies is under development aimed at biobetter glycoproteins (Table 7). Many of these technologies attempt to lengthen the half-life of the drug in the body and hence increase convenience and patient compliance. Techniques include engineering the protein to alter its glycosylation pattern or its sequence of amino acids, fusing it with albumin or a carrier protein, and using controlled-release technology.

Medgenics are developing Epodure, a device to deliver a sustained dose of erythropoietin over a period of many months. The device, termed a biopump, is an explant of the patient’s own skin with genes inserted that express and secrete erythropoietin.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Table 7: Biobetter Glycoproteins - New Technologies

Biobetter

Description

Current Development Phase

Aranesp (darbepoetin alfa, Amgen)

Hyper-glycosylated analogue of epoetin alfa Biobetter for Epogen/Procrit/Eprex (epoetin alfa, Amgen/Johnson & Johnson)

Marketed

Albuferon (ABF656, Human Genome Sciences/Novartis)

Albumin-interferon fusion protein Possible biobetter for Intron A (interferon alfa-2b, Merck & Co. [formerly Schering-Plough])

Phase III

Locteron (interferon alfa-2, Biolex)

Recombinant interferon alfa (BLX-883), combined with PolyActive controlled-release technology Possible biobetter for Pegasys or Pegintron

Phase II

IFN Alpha XL (interferon alfa-2b, Flamel)

Long-acting interferon alfa-2b adsorbed on carrier protein (Medusa platform) Possible biobetter for Pegintron

Phase II

Epodure

Explanted biopump, expressing and producing erythropoietin Possible biobetter for Epogen

Phase I/II

(erythropoietin,

Medgenics)

Biobetter Glycoproteins: Improved Manufacturing

Biotechnology companies are developing improved manufacturing methods for glycoproteins. For example, Merck & Co. is carrying out Phase II testing on a darbepoetin alfa candidate drug (MK-2578) manufactured in yeast cells.

However, glycoprotein biobetters will have to demonstrate a clinical advantage over competitors in addition to a superior manufacturing method. Shire’s epoetin delta product, Dynepo, manufactured in human rather than animal cells, was withdrawn from the market in 2008 because it did not offer sufficient clinical benefits over competitor products.

Erythropoietin Drugs

Three recombinant erythropoietin products dominate the global market: Amgen and Johnson & Johnson’s Epogen/Procrit/Eprex (epoetin alfa); Roche’s NeoRecormon/Epogin (epoetin beta) and Amgen’s glycoengineered biobetter, Aranesp (darbepoetin alfa). Longer-acting Aranesp offers the advantage of requiring less frequent dosing. Patents protecting first-generation epoetin products have expired, except those protecting Epogen in the US that run until 2013. Aranesp is still protected by multiple patents. Roche has launched a pegylated biobetter, Mircera (methoxy polyethylene glycol-epoetin beta), although it has suffered from the lack of a US launch as a result of patent infringement litigation. All these erythropoietin drugs treat anaemia following renal failure or chemotherapy.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

The EMEA has approved multiple biosimilar epoetin products in Europe and these have achieved significant market share in Germany. The erythropoietin market is now very competitive. Shire’s decision to cease commercialisation of Dynepo illustrates this high level of competitiveness.

Longer-acting epoetin biobetters currently in development are likely to struggle in competition with Aranesp, Mircera and epoetin biosimilars. These biobetters include Merck & Co.’s version of darbepoetin alfa manufactured in yeast cells currently in Phase II testing, and Medgenics’ erythropoietin-producing gene therapy implant in Phase I/II testing. Additionally, all erythropoietins face possible future competition from biological and small-molecule drugs that are designed to control erythropoiesis by mechanisms other than replacing natural erythropoietin. They include AffyMax’s Hematide, currently in Phase III clinical testing and FibroGen’s FG-4592, in Phase II testing.

Granulocyte Colony-Stimulating Factor (G-CSF)

The two leading recombinant G-CSF drugs on the market are Amgen’s Neupogen (filgrastim) and Roche’s Neutrogin (lenograstim), used to treat neutropenia (low levels of white blood cells) in oncology applications. Key patents on Neupogen have expired in Europe but remain active in the US until 2013.

A biobetter pegylated version of Neupogen Amgen’s longer-acting Neulasta (pegfilgrastim) – now has annual sales exceeding those of Neupogen. Neulasta’s key patents are expected to lapse in 2015.

G-CSF is an attractive biosimilar target for manufacturers, and in Europe the EMEA has approved a number of biosimilar filgrastim products. However, the key threat will likely come from biosimilar pegfilgrastim. In the G-CSF sector, the main biobetter strategy will therefore be to develop G-CSF products that are longer acting than Neulasta. Companies developing biobetter pegfilgrastim include Maxygen, Merck & Co. and Bolder BioTechnology. Hanmi is attempting to extend the half-life of filgrastim by conjugating it with a carrier protein.

Interferons

Two types of interferon provide the largest revenues for manufacturers: α-interferon products are used primarily for hepatitis C and B treatment, and β-interferon beta products treat patients with multiple sclerosis.

Sales of the pegylated α-interferon products Roche’s Pegasys (peginterferon alfa-2a and Merck & Co.’s (formerly Schering-Plough’s) Pegintron (peginterferon alfa-2b) have now eclipsed sales of first-generation α-interferon products, including Roche’s Roferon-A (interferon alfa-2a) and Merck & Co.’s (formerly Schering-Plough’s) Intron A (interferon alfa-2b). Key US and European patents on these products have expired.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Biobetter developers are now concentrating on developing longer-acting α-interferon products, including Novartis’ and Human Genome’s albumin fusion protein, Biolex’s controlled-release formulation, Flamel’s interferon-carrier protein drug conjugate and protein-engineered and improved pegylated interferon products. Oral formulations of α-interferon and β-interferon are also in development.

Three β-interferon products Biogen Idec’s Avonex (interferon beta-1a), Merck KGaA’s Rebif (interferon beta-1a) and Bayer’s Betaferon/Betaseron (interferon-beta-1b) account for the majority of the global market. Again, key patents on these products have expired.

A longer-acting pegylated β-interferon is likely to be the next major development in this drug group: Biogen Idec has a pegylated interferon beta-1a drug candidate in Phase III clinical testing. Other pegylated interferons and protein-engineered β-interferon candidates are in preclinical development. There is a market opportunity for the development of more convenient oral, dermatological or inhaled formulations of β-interferon for patients with multiple sclerosis.

Vaccines

The Vaccine Market

Most vaccines have been in use for many years and the market is open to low-cost competition. Additionally, future biosimilar competition could emerge for newer, high- revenue vaccines such as Merck & Co.’s Gardasil (human papillomavirus vaccine), for the prevention of cervical cancer. Despite the challenge and expense involved in developing, manufacturing and testing vaccines, this sector of the pharmaceutical market is one of the most rapidly growing, as vaccine programmes expand worldwide. Developing biobetter vaccines is a key strategy to access this growing market.

Biobetter Vaccines: New Delivery Methods

More convenient formulations are a strategy for adding value to existing injected vaccines, especially influenza. AstraZeneca has gained regulatory approval for an intranasal influenza vaccine in the US, and vaccines delivered via the skin, either from a patch or through microneedles, are also under development (Table 8). These novel delivery methods will allow vaccines to be administered with less training, and will be attractive to healthcare providers for programmes among the elderly, children and in developing countries.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Table 8: Biobetter Vaccines - New Delivery Methods

Biobetter

Description

Current Development Phase

Flumist

Live attenuated intranasal influenza vaccine

Approved (FDA)

(AstraZeneca)

Intanza/IDflu

Intradermal microinjection vaccine for seasonal influenza

Approved (EMEA, 2009)

(Sanofi-Aventis)

Influenza vaccine enhancement patch (Intercell)

Transdermal vaccine patch with novel adjuvant (IC31) for pandemic H5N1 influenza

Phase II

CholeraGarde

Oral cholera vaccine

Phase II

(Celldex)

Ty800 vaccine

Oral typhoid fever vaccine

Phase II

(Celldex/Vaccine

Technologies

[China])

Typhoid vaccine

Single-dose, oral typhoid fever vaccine

Phase II

(Emergent

BioSolutions)

Biobetter Vaccines: New Technologies

A number of technological improvements can be employed to develop biobetter versions of existing vaccines. These include switching from live, attenuated or inactivated vaccines to recombinant products (Table 9). Particularly for influenza vaccines, the addition of adjuvants (Table 10) can improve the immune response they elicit. Again for influenza vaccines, the introduction of newer cell culture manufacturing methods to replace egg-based systems will simplify production and allow a faster response to emerging influenza strains (Table 11).

Table 9: Biobetter Vaccines - New Recombinant Technologies

Biobetter

Description

Current Development Phase

Ixiaro

Two-dose inactivated Japanese encephalitis vaccine Biobetter for older multi-dose Japanese encephalitis vaccines

Approved (EMEA, 2009)

(Novartis/Intercell)

Imojev (Sanofi-

Single-dose recombinant Japanese encephalitis vaccine

Submitted (Australia and Thailand)

Aventis)

Varicella-zoster vaccine (GlaxoSmithKline)

Recombinant vaccine for shingles prevention Biobetter for Zostavax (zoster vaccine, live, Merck & Co.)

Phase II

Table 10: Biobetter Vaccines - New Adjuvants

Biobetter

Description

Current Development Phase

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Fluad (Novartis)

Grippol Neo (Solvay/Petrovax)

Next-generation flu vaccine (GlaxoSmithKline)

Next-generation flu vaccine (GlaxoSmithKline) Vaccine with novel adjuvant (M59) for seasonal influenza

Vaccine with novel adjuvant (M59) for seasonal influenza

Approved (certain European markets)

for seasonal influenza Approved (certain European markets) Seasonal influenza vaccine with Polyoxidonium adjuvant

Seasonal influenza vaccine with Polyoxidonium adjuvant

Influenza vaccine with AS03 adjuvant for seasonal influenza in the elderly

Approved (Russia, 2009)

Phase III

Table 11: Biobetter Vaccines - New Manufacturing Technology

Biobetter

Description

Current Development Phase

Optaflu (Novartis)

Seasonal influenza vaccine manufactured by cell culture technology

Approved (EMEA, 2007)

PerC.6 influenza

Seasonal influenza vaccine manufactured by cell culture technology (PerC.6)

Phase III

vaccine (Sanofi-

Aventis)

 

Influvac TC (Solvay)

Cell culture influenza vaccine

Phase III (EU); Phase I (US)

Biobetter Vaccines: More Strains

The final strategy for designing biobetter versions of existing vaccines is increasing the number serotypes of a micro-organism against which a vaccine protects. This process is already in progress for two vaccines with high global revenues: Pfizer’s (formerly Wyeth’s) Prevnar (seven-valent pneumococcal vaccine) and Merck & Co.’s Gardasil (Table 12). Currently, Prevnar protects against seven serotypes of Streptococcus pneumoniae, whilst biobetter versions contain 10 or 13 strains. Merck & Co. is developing a biobetter vaccine protecting against nine strains of the human papillomavirus, compared with Gardasil’s four serotypes.

Table 12: Biobetter Vaccines - Broader Spectrum of Activity

Biobetter

Description

Current Development Phase

Synflorix

Conjugate vaccine for the prevention of Streptococcus pneumoniae (10 strains) and Haemophilus influenzae infections Potential biobetter for Prevnar (seven-valent pneumococcal vaccine, Pfizer [formerly Wyeth])

Approved (EMEA, 2009)

(GlaxoSmithKline)

Prevnar 13 (Pfizer [formerly Wyeth])

Thirteen-valent vaccine for prevention of Streptococcus pneumoniae infections Biobetter for Prevnar

Submitted (EMEA, 2008; FDA, 2009)

HPV Vaccine (Merck & Co.)

Nine-valent HPV vaccine Biobetter for Gardasil (four-valent HPV vaccine, Merck & Co.)

Phase III

Four-valent seasonal influenza vaccine (AstraZeneca)

Four-valent seasonal influenza vaccine

Phase II

HPV = human papillomavirus

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Protein Hormones

The Insulin Market

Insulin is the most commercially important of the simple nonglycosylated hormones. The market is dominated by recombinant human insulin and insulin analogues marketed by Eli Lilly, Novo Nordisk and Sanofi-Aventis. Patents protecting the leading human insulin products have expired in North America and Europe. The leading insulin analogues, which have an altered amino-acid sequence in order to modify their speed of absorption and utilization by the body, have patents set to expire during 2010-2014. The EMEA has not yet approved any biosimilar insulin products. However, biosimilar insulin is available in certain Asian and Eastern European markets and is likely to reach Western European markets in the near future.

Novel Formulations are the Key Biobetter Opportunity

Subcutaneous injection using a variety of syringes and pens is by far the most common insulin delivery method employed by patients with diabetes. The trend for replacing human insulin with novel insulin analogues for use in these subcutaneous injections is likely to continue. Other formulations are available, including continuous subcutaneous administration through an insulin pump, and a dermatological formulation in which a jet of high-pressure air sends an insulin mist through the skin. The main commercial opportunity for biobetter insulins in the future is for additional noninvasive formulations that may be more convenient to patients and thereby increase compliance. Biosimilar insulin may not gain in commercial importance if markedly more convenient biobetters are developed.

New Insulin Delivery Methods

New, non-invasive insulin delivery methods currently in clinical trials are shown in Table 13. In developed markets these novel formulations will provide the main opportunity for developing biobetter insulin products to compete with biosimilar products.

For a biobetter insulin to be successful it will have to be significantly easier to use than existing injection devices, hence promoting better patient compliance and ideally be more effective. In 2006, Pfizer and Sanofi-Aventis launched an inhaled insulin, Exubera. However, it was withdrawn from the market in 2007, owing to disappointing sales. The drug was not more effective than injections, was only marginally more convenient in that it reduced the number of injections required rather than eliminating them and suffered from safety fears over the risk of lung cancer in prolonged use.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Dermatological Insulin

Of the novel insulin formulations in development, including oral, dermatological and suppository, dermatological formulations are perhaps the most promising. These rely on the active delivery of insulin through the dermal layer aided by ultrasound, electrical charges or air jets. Patients are already familiar with insulin delivery through the skin and transdermal technologies can include systems for the continuous monitoring of blood sugar concentration, in the manner of existing insulin pumps.

Oral Insulin

Oral insulin formulations involve the incorporation of components to protect the insulin from the harsh gastrointestinal environment, and promote absorption through the intestine. Insulin delivered by this method reaches the liver in higher concentration than that administered subcutaneously, and may mitigate diabetes symptoms through hepatic glucose regulation. Oral formulations are challenging to develop and an alternative approach is Generex’s Oral-Lyn (in Phase III of development) in which the insulin in the form of a spray is absorbed by the mouth lining.

Inhaled Insulin

The commercial failure of Pfizer’s Exubera has discouraged the development of inhaled

insulin and indeed this delivery method suffers from a relative lack of control over dosage, safety fears and the use of large amounts of insulin. In 2008, Novo Nordisk decided to stop all further development of inhaled insulin. Nevertheless, MannKind has submitted its Afresa inhaled insulin to the FDA and expects a regulatory decision in

2010.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Table 13: Biobetter Insulin Devices

Biobetter

Description

Current Regulatory Status

Afresa (MannKind)

Inhaled, ultrafast-acting insulin

Submitted (FDA, May 2009)

Oral-Lyn (Generex)

Insulin formulated as oral spray, absorbed via mouth lining

Phase III (US)

IN-105 (Biocon)

Oral insulin analogue

Phase III (India); Phase I (Europe)

TPM Insulin

Transdermal insulin

Phase II (Australia)

(Phosphagenics)

ORMD 0801

Oral insulin capsule

Phase II

(Oramed)

Oral insulin

Oral insulin

Phase II

(Emisphere)

Nasulin (CPEX)

Inhaled insulin

Phase II

Biobetter Growth Hormones and other Hormones

Novo Nordisk is developing a pegylated growth hormone with a longer half-life, which is currently in Phase II clinical development. Emisphere is developing an oral growth hormone (currently in Phase I testing).

Other biobetter hormone targets include calcitonin, indicated for osteoporosis. Novartis, in collaboration with Nordic Bioscience and Emisphere is developing a biobetter oral formulation (SMC021) of their injected salmon calcitonin Miacalcin/Miacalcic. SMC021 is currently in Phase III testing.

Other Biological Drugs

Other types of biobetter drug in development are shown in Table 14.

Table 14: Other Biobetter Examples

Biobetter

Description

Current Regulatory Status

Recombinant factor XIII (Novo Nordisk)

Recombinant version of existing human-derived factor XIII

Phase III

NN1731 (Novo Nordisk)

Fast-acting analogue of recombinant factor VIIa

Phase II

NN7128 (Novo Nordisk)

Long-acting glycopegylated analogue of recombinant factor VIIa

Phase II

Kogenate (Bayer)

Pegylated recombinant factor VIII

Phase II

Oral heparin (Emisphere)

Oral heparin formulation

Phase II

Long-acting factor IX (Biogen Idec/Biovitrum)

Long-acting recombinant factor IX fusion protein

Phase I/II

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Leading Biobetter Companies

Who are the Biobetter Leaders?

Large pharmaceutical companies market most of the biological therapies currently available to patients. Amgen, the world’s largest biotechnology company, has grown to be a top-20 pharmaceutical company since its inception in 1980 and markets five separate blockbuster biological drugs. Nevertheless, this is an exception and the trend of large pharmaceutical companies acquiring or licensing late-stage biological therapies, including biobetters, is likely to be consolidated by the current difficult financial climate.

Which large pharmaceutical companies are leading the field in the development of biobetters? The leading pharmaceutical companies involved in the development and marketing of biological medicines can be divided into three groups. Firstly there are the ‘biobetter strategists’. This group consists of Novo Nordisk and Merck & Co., both of which have a specific strategy of developing biobetters. Novo Nordisk already has an extensive biological drug portfolio, and sees biobetters as a key plank in its strategy of defence against biosimilars. Merck & Co., by contrast, is a late entrant to the biological drug market, and sees biobetters as a method for gaining future biological market share.

The second group, the ‘bioleaders’, are already leading biological drug companies. These companies are Roche, Biogen Idec, Amgen, Sanofi-Aventis and Eli Lilly and are characterised by development strategies focussed on new biological therapies, with biobetters taking lower priority. These companies have biological drugs exposed to future biosimilar competition.

Members of the third and final group Novartis, GSK, AstraZeneca and Pfizer have little or no strategic biobetter development. Novartis is concentrating on the development of novel biological therapeutics and biosimilars. Other companies in the group mostly rely on small-molecule drugs but are pursuing biological expansion through the development of novel biologicals.

The Biobetter Strategists

Novo Nordisk

Novo Nordisk has the leading biobetter strategy amongst major pharmaceutical companies. The company obtains the majority of its sales revenues from biological drugs, mainly insulin, blood factors and human growth hormone. Leading blockbuster brands include the insulin analogue Novorapid/Novolog (insulin aspart), human insulin (marketed under brand names including Actrapid and Insulatard), Norditropin human growth hormone (somatropin) and Novoseven (recombinant factor VII). Novo Nordisk is

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

viewing the threat of biosimilar competition to these products very seriously and has responded by focussing a key part of its development pipeline activities on biobetters.

Aware of the spread of biosimilar insulin in Asia and Eastern Europe, Novo Nordisk is developing new premixes of its existing insulin analogues, with the aim of increasing glycaemic control and patient convenience. Also, the company is developing the new insulin analogue, Siba (soluble insulin basal analogue: NN1250), a long-acting next- generation insulin with a potential duration of action of more than 24 hours. Phase III testing began at the end of 2009.

Novo Nordisk has a biobetter recombinant factor XIII product in Phase III clinical testing. It improves on existing factor XIII products, which contain human-derived material, and hence have a higher theoretical risk of transmitting infectious agents. A long-acting glycopegylated derivative of factor VIIa and a fast-acting analogue of factor VIIa are both in Phase II clinical testing. Both are potential biobetters for Novo Nordisk’s Novoseven. Another glycopegylated recombinant factor VIIa candidate is in Phase I testing as a subcutaneous injection, instead of the standard intravenous injection. Other projects involving biobetter blood factors include a long-acting factor IX and an improved factor VIII product with no added animal or human proteins.

Finally, Novo Nordisk is developing a longer-acting version of its recombinant growth hormone. The company hopes its pegylated candidate drug will improve patient convenience by reducing the number of injections needed.

Merck & Co.

In the past year, Merck & Co. has moved rapidly to enter the biobetter field. In December 2008, the company set up a dedicated biologicals unit, Merck BioVentures (MBV), to develop biological therapies and what Merck terms ‘follow-on biologics’. MBV has access to proprietary glycoengineering technology, gained during Merck’s $400 million acquisition of GlycoFi in 2006. The technology allows yeast-based production of therapeutic proteins with a higher degree of uniformity of glycosylation than traditional mammalian cell culture manufacturing methods. According to Merck & Co., glycoengineered drugs have the potential for increased specificity, bioavailability and residence time in the body than those produced in mammalian cells.

In February 2009, MBV acquired a portfolio of biological drugs and biological manufacturing facilities from Insmed, giving it a pipeline of follow-on biologicals that includes darbepoetin alfa (MK-2578, in Phase II testing) and both filgrastim and pegfilgrastim (MK-4214 and MK-6302, both in Phase I testing). Merck is likely to attempt to develop and market these pipeline products, and potentially further biologicals, as glycoengineered biobetters, with claimed therapeutic advantages over existing biological drugs. Of course, if an appropriate regulatory pathway is established in the US, Merck may retain the option of marketing biosimilars.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

In addition to its MBV programme, Merck is developing a biobetter version of its vaccine, Gardasil (human papillomavirus vaccine). As a result of the company’s merger with Schering-Plough in November 2009, Merck gained control of the pegylated biobetter, Pegintron (peginterferon alfa-2b). Prior to this merger Schering-Plough and Johnson & Johnson shared rights to both of the monoclonal antibodies, Remicade (infliximab) and its recently-launched biobetter, Simponi (golimumab). Arbitration is in progress to determine whether Johnson & Johnson or Merck & Co. gain control after merger.

The Bioleaders

Roche Group

The Roche Group, comprising Roche, Genentech and Chugai, derives over 50 percent of its pharmaceutical sales revenues from biological drugs, more than most other large pharmaceutical companies. The group has a history of developing second-generation biobetters of existing biological drugs. Genentech developed Lucentis (ranibizumab), a fragment of the Avastin (bevacizumab) monoclonal antibody and currently marketed for age-related macular degeneration. Roche has developed Pegasys, a pegylated interferon alfa-2a for hepatitis treatment and Mircera, a pegylated epoetin beta product.

Roche and Genentech developed the majority of their biological drugs in-house, although Roche has extended its capabilities by acquisitions such as that of GlycArt in 2005. GlycArt’s antibody glycosylation technology has the potential to improve the cell-killing capabilities and efficacy of existing antibodies. Roche has also begun clinical trials in partnership with Halozyme, investigating subcutaneous formulations of biologicals currently administered by intravenous injection.

The Roche Group has a development pipeline richer in both biobetters and novel biological therapies than many of its competitors. A key strategy is the development of biobetter versions of many of its highest-selling monoclonal antibodies. The company is developing two different humanised versions of the chimaeric monoclonal antibody, Mabthera/Rituxan (rituximab): R7159 for non-Hodgkin’s lymphoma and ocrelizumab (R1594) for rheumatoid arthritis and multiple sclerosis. Roche is also developing two biobetters for the treatment of HER2-positive breast cancer. Trastuzumab-DM1 is an antibody-drug conjugate, consisting of Herceptin (trastuzumab) conjugated with ImmunoGen’s cytotoxic agent DM1. Pertuzumab is a humanised monoclonal antibody that inhibits the pairing of HER2 with other HER receptors, a key mechanism of tumour growth. It is being investigated as a combination therapy with Herceptin. Roche’s pipeline also includes a fully human EGFR monoclonal antibody in early-stage development.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Biogen Idec

Biogen Idec derives its revenues from the novel monoclonal antibody therapeutics Mabthera/Rituxan, Avonex (interferon beta-1a) and the multiple sclerosis treatment, Tysabri (natalizumab). The company’s development pipeline contains a number of novel biological therapies and biobetter drug candidates.

Biogen Idec’s biobetters in development include a pegylated version of interferon beta- 1a for multiple sclerosis, currently in Phase III of clinical testing, and ocrelizumab, a biobetter anti-CD20 monoclonal antibody under development in partnership with the Roche Group.

Additionally, the company is developing longer-acting versions of two blood factors in partnership with Biovitrum. Long-acting factor IX for haemophilia B is in Phase II of development, whilst long-acting factor VIII is in preclinical testing for haemophilia A treatment. These longer-acting factors use a technology platform involving fusion with the Fc region of antibodies to produce recombinant fusion proteins. Biogen Idec obtained this platform as a result of its 2007 acquisition of Syntonix.

Amgen

Amgen is the world’s largest biotechnology company and markets a number of blockbuster biological drugs: the fusion protein, Enbrel (etanercept), Epogen (epoetin alfa), and Neupogen (filgrastim). Amgen markets two further blockbuster biobetters, Aranesp (darbepoetin alfa), a glycoengineered second-generation product to Epogen, and Neulasta (pegfilgrastim), a pegylated follow-on product for Neupogen.

Since Amgen has already developed second-generation products for two of its major first-generation products, it is a biobetter pioneer and has significantly strengthened its position against future biosimilar competition. As a result, Amgen’s current research and development pipeline is centred exclusively on novel therapeutics, from which the company plans to achieve future growth. Nevertheless, Amgen’s expertise in biological drug development, biological manufacturing, and process development should give the company a competitive edge in developing biobetters of marketed drugs in the longer term.

Sanofi-Aventis

Sanofi-Aventis obtained roughly 30 percent of drug revenues in 2008 from biological drugs. These included the low-molecular weight heparin Lovenox (enoxaparin), Lantus (insulin glargine) and a wide range of vaccines. The company has a strategy of increasing its development of biological drugs through acquisitions, alliances and licence agreements, for example, acquiring the vaccine developer, Acambis, in 2008.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

The company has a rich pipeline of vaccines, including second-generation and improved versions of existing vaccines. Sanofi’s recently approved influenza vaccine uses an intradermal delivery mechanism. Late-stage improved vaccine projects include a next- generation influenza vaccine using cell culture manufacturing and an improved Japanese encephalitis vaccine requiring fewer doses. Improved vaccines in an earlier stage of development include a recombinant pneumococcal vaccine, a shingles vaccine and an improved second-generation version of Sanofi’s Menactra, a vaccine indicated for the prevention of meningococcal disease.

Eli Lilly

Eli Lilly has a relatively long history of biological drug development and markets blockbuster biological drugs including the growth hormone Humatrope (somatropin) and the insulin products Humulin (human insulin) and Humalog (insulin lispro).

Eli Lilly boosted its biological drug products and biological development pipeline by the November 2008 acquisition of ImClone, a therapeutic antibody company. As a result, Eli Lilly has a pipeline of both innovative and biobetter biological drugs, including the biobetter candidate ramucirumab (IMC-1121B), a fully human monoclonal antibody targeting VEGFR-2. It is currently in Phase III testing in patients with metastatic breast cancer, but could potentially compete effectively with Roche’s Avastin for the treatment of a wide range of solid tumours. Other biobetter drug candidates include a fully human antibody targeting EGFR (IMC-11F8) and a biobetter CD20 antibody for non-Hodgkin’s lymphoma. Both of these are in Phase II clinical testing.

Other Large Pharmaceutical Companies

GlaxoSmithKline

GlaxoSmithKline (GSK) reported that it derived only six percent of its 2008 drugs revenues from biological drugs, the vast majority from vaccines, but hopes to increase this through in-house discovery, acquisitions and in-licensing late-stage products. In 2008, GSK created a biologicals research and development unit, Biopharm.

The company’s vaccine development pipeline includes biobetter versions of Pfizer’s pneumococcal vaccine Prevnar, Merck & Co.’s shingles vaccine Zostavax, and improved influenza vaccines with novel adjuvants. GSK’s pipeline also includes novel vaccines for diseases with no available vaccine.

GSK is aiming to expand its portfolio of biological therapies to antibody-based drugs, including both antibody fragments and full-sized monoclonal antibodies. In 2007, GSK acquired Domantis, a biotechnology company that had developed antibody fragments (Domain Antibodies) with potential applications in delivery formulations other than

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

traditional injected formulations. However, GSK’s immediate biobetter hopes are pinned on Arzerra (ofatumumab), approved by the FDA in October 2009. As a full-sized, fully human monoclonal antibody, Arzerra may provide strong competition for Roche’s chimaeric monoclonal antibody Mabthera/Rituxan.

Novartis

Currently, Novartis markets biological drugs in the form of vaccines and the monoclonal antibodies Xolair (omalizumab) and Lucentis (ranibizumab). Novartis’s future biological strategy is focussed primarily on developing innovative biological drugs and biosimilars, rather than biobetters. In 2007, the company created a biologicals unit, designed to improve biotechnology innovation and drive future growth of novel biological therapies.

Novartis develops and markets biosimilars through its generics division, Sandoz, which is the leading biosimilar developer and marketer in developed world markets. The generics manufacturer has gained EMEA approval for three biosimilars: the growth hormone, Omnitrope, a biosimilar epoetin alfa and Zarzio, a biosimilar filgrastim.

Despite having faith in the future commercial viability of biosimilars, Novartis is developing a few biobetters. These include an albumin-interferon alfa-2b fusion protein for hepatitis C (Albuferon, ABF656) and an oral formulation of the hormone calcitonin for osteoporosis (SMC021). In its vaccines division, Novartis has developed an improved Japanese encephalitis vaccine in partnership with Intercell and improved influenza vaccines utilising novel adjuvants and cell culture manufacturing methods.

AstraZeneca

AstraZeneca has gained biological drugs and biological development capabilities through the acquisition of biotechnology companies, including Cambridge Antibody Technology in 2006 and MedImmune in 2007. As a result, AstraZeneca gained the nasal influenza vaccine Flumist and the monoclonal antibody Synagis (palivizumab), for the prevention of respiratory syncytial virus infection.

AstraZeneca is pursuing biobetter versions of influenza vaccines, including a four-valent seasonal influenza vaccine, and is developing Numax (motavizumab), a reportedly more potent biobetter version of Synagis. This biobetter monoclonal antibody is designed to achieve greater efficacy through greater affinity for its target. In addition to this biobetter campaign, AstraZeneca is developing multiple novel monoclonal antibodies for diseases including asthma and rheumatoid arthritis.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Pfizer

Until 2009, Pfizer had relied almost exclusively on business from small-molecule drugs. Now, however, the company sees the development of biological drugs as its most important future tactic. A strategy of developing both innovative and biobetter biological drugs is being implemented by the acquisition of other companies, including most notably the $68 billion acquisition of Wyeth, completed in October 2009.

By acquiring Wyeth, Pfizer has gained not only the blockbusters Enbrel (etanercept) and Prevnar (seven-valent pneumococcal vaccine), but also important biological manufacturing knowledge and facilities and a useful biological drug pipeline. This pipeline includes biobetters such as Prevnar 13, a vaccine for the prevention of pneumococcal disease in children caused by 13 strains of Streptococcus pneumoniae. Wyeth heralded Prevnar 13 as a significant advance, since the biobetter vaccine protects against six extra pneumococcal strains, compared with the seven strains for Prevnar.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Conclusion

Biosimilars already are a reality in Europe and much of Asia, and have now arrived in Japan and Canada. It is difficult to believe that the US will not adopt them within the next four years. Although the degree to which biosimilars will become accepted and enjoy commercial success is as yet unknown, there is a distinct possibility for a rapid growth in the biosimilar market in the coming years.

In many cases, the manufacturers of branded biologicals threatened by biosimilars have the opportunity of defence against this biosimilar threat by developing second- generation, biobetter versions of existing biological drugs. With sufficient clinical superiority or improvement in convenience of use, biobetters could compete successfully with biosimilars and prevent them from gaining market share.

First-generation biological drugs are largely immediate-release formulations of proteins, delivered by subcutaneous injection or infusion. Biobetter, versions of these drugs involve either improving their manufacturing process, for example by switching to microbial, insect or plant-based cell systems, or engineering the protein structure of the drug.

Engineering can entail the alteration of the amino acid sequences or the glycocomponent of a glycosylated protein, or the attachment of other components such as PEG, albumin or proteins. The resulting biobetter may gain a competitive advantage through an increase in the half-life in the body, which may lead to reduced dosing frequency, improved bioavailability and reduced toxicity. Alternatively, protein engineering may allow creation of a biobetter with altered function and therefore improved clinical effectiveness or reduced side effects. Finally, biobetter development may allow creation of an oral, dermatoglocial or inhaled formulation having more convenient dosage formats and potentially improved patient compliance.

Novo Nordisk and Merck & Co. have already adopted a biobetter strategy for their future development. Novo Nordisk, with a drug portfolio vulnerable to biosimilar competition, sees biobetters as a key plank in its strategy for maintaining market share against low- cost competitors. Merck & Co, a late entrant to the biological drug market, sees biobetters as a method for gaining future biological market share. Interest in biobetter development, either through in-house development, partnerships or acquisitions, is likely to increase amongst other large pharmaceutical companies in the coming years.

For many companies, development of biobetters will provide an essential complementary activity to the development of novel biological therapeutics. The aim of biobetter development will be to develop a product with a distinct clinical advantage or more convenient formulation for patients. Only these clearly differentiated biobetters will

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

provide strong competition for future biosimilars, gain satisfactory reimbursement from payers and achieve commercial success.

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Abbreviations

EGFR - Epidermal growth factor receptor

EMEA - European Medicines Agency

FDA Food and Drug Administration (US)

G-CSF - Granulocyte colony-stimulating factor

GSK - GlaxoSmithKline

HPV - Human papillomavirus

MBV - Merck BioVentures

NICE - National Institute for Health and Clinical Excellence (UK)

PEG - Polyethylene glycol

RSV F - Respiratory syncytial virus F protein

SIBA - Soluble insulin basal analogue

TNF - Tumour necrosis factor

VEGF - Vascular endothelial growth factor

VEGFR - Vascular endothelial growth factor receptor

Biobetters -- major players and market prospects

Biobetters -- major players and market prospects

Index

A

E

Abbott Acambis Actrapid adalimumab Albuferon Amarillo Biosciences Amgen anti-TNF Aranesp Arzerra Asia AstraZeneca Avastin Aventis Pasteur MSD Avonex

18

Elan

11

35

Eli Lilly

19, 28, 31, 35 3, 4, 8, 10, 13, 18, 24, 26, 27, 28, 36, 40

32

EMEA

18

Emisphere

30

36

Enbrel

2, 34, 37

16

enoxaparin

35

2, 22, 23, 24, 31, 34

epoetin

2, 10, 21, 22, 23, 24, 33, 34, 36 23, 34

11

Epogen

23, 24, 34 18, 36 3, 32, 38 18, 25, 26, 28, 31, 37 17, 18, 19, 21, 33, 35

15

Erbitux

19

erythropoietin

2, 3, 4, 10, 11, 21, 22, 23, 24 2, 34, 37 3, 4, 5, 10, 13, 24, 28, 30, 32, 38

etanercept

Europe

 
 

22, 25, 34

F

B

Bayer

25, 30 11, 17, 18, 22, 25, 30, 31, 34

Biogen Idec

Biopharm

36

Biotherapeutics

15

Biovitrum

30, 34

Bristol-Myers Squibb

19

C

Cambridge Antibody Technology Canada CD20 antibody chimaeric monoclonal antibodies China Chugai

37

4, 38

19, 35

18

26

33

D

darbepoetin alfa

23, 24, 32, 34

DMARDs

15

Domantis

36

FDA

4, 8, 10, 13, 18, 26, 27, 29, 30, 36, 40 2, 22, 24, 32, 34, 36 26, 37

filgrastim

Flumist

G

Gardasil

25, 27, 33 2, 4, 21, 22, 24, 40 15, 21, 33 18, 19

G-CSF

Genentech

Genmab

glargine

35

GlaxoSmithKline

7, 18, 26, 27, 35, 40

GlycArt

33

GlycoFi

32

golimumab

18, 33 7, 31, 35, 36, 40

GSK

H

Halozyme

33

Herceptin

7, 17, 18, 19, 20, 33

Humalog

35

Humatrope

35

Humira

18, 21

Humulin

35

Biobetters -- major players and market prospects I IMC-1121B 35 ImClone 35 ImmunoGen 20, 34

Biobetters -- major players and market prospects

I

IMC-1121B

35

ImClone

35

ImmunoGen

20, 34 17, 30

India

Insmed

32

Insulatard

32

insulin

2, 3, 15, 16, 28, 29, 30, 31, 32, 35, 40

insulin aspart

31

insulin lispro

35

interferon beta-1a

22, 25, 34 2, 3, 15, 25

interferons

J

Japan Japanese encephalitis vaccine Johnson & Johnson

4, 5, 38 26, 35, 36 17, 18, 19, 23, 33

L

Lantus

35

Lovenox

35

Lucentis

12, 13, 21, 33, 36

M

Mabthera

17, 18, 19, 33, 34, 36

MedImmune

37

Menactra

35

Merck & Co 17, 18, 19, 22, 23, 24, 25, 26, 27, 31, 32, 33, 36, 38

Merck BioVentures

32, 40 19, 22, 25

Merck KGaA

Miacalcin/Miacalcic

30

Mircera

22, 23, 24, 33 23, 32

MK-2578

MK-4214

33

MK-6302

33

motavizumab

37

Motavizumab

18

N

natalizumab

11, 34

Necitumumab

19

Neulasta

22, 24, 34 22, 24, 34

Neupogen

New Zealand

12

NICE

12, 40

NN1731

30

non-Hodgkin’s lymphoma Nordic Bioscience Novartis Novo Nordisk Novolog Novorapid Novoseven Numax

17, 18, 33, 35

30

12, 13, 21, 23, 25, 26, 27, 30, 31, 36 28, 29, 30, 31, 32, 38

31

31

32

37

O

ocrelizumab

33, 34

Ocrelizumab

18

ofatumumab

18, 36

omalizumab

36

Omnitrope

36

Oramed

15, 30

P

palivizumab

18, 37 22, 23, 24, 33 22, 24, 33, 34 19, 20, 34 2, 27, 29, 31, 36, 37 27, 36, 37

Pegasys

pegfilgrastim

Pertuzumab

Pfizer

Prevnar

R

R1594

33

ramucirumab

35

Ramucirumab

19

ranibizumab

12, 21, 33, 36 17, 18, 21, 33

Remicade

RG7159

18

rheumatoid arthritis

2, 12, 15, 17, 18, 33, 37

Rituxan

17, 18, 19, 33, 34, 36 7, 12, 17, 18, 19, 20, 21, 22, 23, 24, 31, 33, 34, 35, 36

Roche

S

Sandoz

36

Sanofi Pasteur MSD

15

Sanofi-Aventis Schering-Plough

26, 27, 28, 29, 31, 35 17, 19, 22, 23, 24, 33

Siba

32

Simponi

18, 33

Biobetters -- major players and market prospects SMC021 30, 36 2, 4, 32, 35 18,

Biobetters -- major players and market prospects

SMC021

30, 36 2, 4, 32, 35 18, 37

somatropin

Synagis

Syntonix

34

T

trastuzumab

7, 15, 17, 20, 34 11, 34

Tysabri

U

US2, 3, 4, 11, 12, 13, 17, 18, 23, 24, 25, 27, 30, 33, 38, 40

W

Wyeth

2, 27, 37

X

Xolair

36

Z

Zalutumumab

19

Zarzio

36

Zostavax

26, 36

V

Veltuzumab

18