Biosimilars – unique “near-copies” of biological medicines
A biosimilar is a medicine that is similar to an already approved biological medicine – the biological reference medicine – but is not identical. Unlike generic products of chemically produced medicines, where the active substance is identical to that of the reference medicine, biosimilars are unique. In order for a product to be approved for sale, it must be possible to show that the biosimilar and the biological reference medicine do not differ in terms of safety and efficacy in treating patients. A biosimilar must therefore be analysed and characterised biochemically, preclinically and clinically in order to demonstrate comparability in all areas. This is something that Genovis enzymes make possible.
Political price pressure on pharmaceuticals could lead to more copies
After a period of initial confusion following the US presidential election last fall, it is now relatively clear that the new administration plans to actively work to reduce the government's high costs for medicines. This, together with new and clearer guidelines from the US Food and Drug Administration, should pave the way for higher demand for affordable drug copies and an increased incentive for major pharmaceutical companies to advance the pace of development of biosimilars, which are generally priced at a discount of approximately 30-40 percent compared to the original drugs. This development, in turn, enables increased demand for Genovis' products.
New FDA guidelines make it easier for the industry
Major industry organizations have recently criticized the US FDA for not clearly clarifying the type or extent of information that is actually required to obtain approval for biosimilars. Compared to Europe, very few – only a handful – biosimilars have been approved in the US to date. New guidelines However, the recently announced interchangeability guidelines by the FDA mean that it will be easier for companies to plan their biosimilar studies against already approved medicines. This also suggests that demand for biosimilars will increase in the US. Overall, the FDA's decision aims to facilitate the evaluation of situations where one medicine can be authorized to be exchanged for another - a process that has so far been a lengthy process in the US compared to the guidelines used within the EU's equivalent to the FDA, the European Medicines Agency (EMA).
Patent expirations increase interest in developing biosimilars
Another important reason why the market for biologics is in a strong growth phase is that many patents for blockbuster biologics are about to expire in the coming years. This has also led to an increase in the development of biosimilars – by 2020, patents with commercial values equivalent to $67 billion expire, which has led many companies in the pharmaceutical industry to now compete to develop generic alternatives. Regulatory authorities have strict requirements for extensive documentation of the development process, which in turn requires fast, cost-effective and qualitative analytical methods, of the type that Genovis already supplies to several of the world's largest pharmaceutical companies.
Antibody-based drugs – a niche on strong growth
New biological drugs based on antibodies – Genovis’ other strong point alongside biosimilars – are also experiencing very strong growth, primarily in the development of new therapies for cancer, but also in inflammatory and autoimmune diseases. As many as six of today’s twelve top-selling drugs are monoclonal antibodies. Since 1986, only about 30 monoclonal antibodies (mAbs) have been approved. Currently, more than 600 antibody-based drug candidates are in development and about 370 of them are already in clinical trials, and the number of products reaching the market is expected to increase sharply in the coming years – according to a forecast From 2015, global sales of therapeutic monoclonal antibody (mABs) products by 2020 will amount to approximately $125 billion.
Genovis is well-equipped for increased demand
According to Genovis itself, there are several factors that will drive the demand for good analytical methods over the next ten years, as more and more of the major pharmaceutical companies position their product portfolios towards biological medicines. The market for biosimilars is growing rapidly and is estimated to reach approximately USD 3 billion by 2023. More new monoclonal antibodies will be approved, resulting in strong sales growth. At the same time, new antibody formats are also being developed that contribute to market growth, such as second-generation mAbs and bispecific antibody drugs. Genovis is well equipped to meet this development with a wide range of products that can be used for all these different classes of new medicines, it has a well-established customer base and it works closely with its customers, which provides a good understanding of their needs and what future solutions will be in demand.
Antibody labeling – a future cash cow for Genovis?
Genovis currently has seven different enzyme products for use in the analysis of biologics. The market base for these will likely continue to grow as more application areas are added in the coming years. Perhaps the most exciting addition to Genovis' product portfolio, however, is a completely new technology for labeling antibodies – a product they have chosen to call GlyClick.
Licensing collaboration with industry giant
After Genovis was approached by, and in October last year entered into a licensing partnership with, Life Technologies – a subsidiary of industry giant Thermo Fisher – they gained access to a technology that, in combination with Genovis' unique enzyme, makes it possible to label antibodies in a much more precise way than previously possible, regardless of the type and origin of the antibody.
Hurry slowly – a wise strategy
Genovis' strategy is to initially establish its product in preclinical research, but it has been clear that it also sees several potential clinical applications for GlyClick – and that is where the really big economic potential lies. Typical areas of use for the new technology platform are in various diagnostic applications, but also in the development of next-generation antibody drugs, so-called ADCs (Antibody Drug Conjugates). ADC is a highly expansive sector, not least in the development of new cancer treatments.
Genovis' primary choice to market GlyClick to the preclinical market within the biopharma industry is because that is where the company currently has the majority of its customer base. This allows it to work with its existing customer group, primarily focusing on the preclinical imaging market – a market that is valued at approximately $500 million globally this year, according to the research firm Markets and Markets.
The step into clinical development multiplies the potential
The really big upside, however, becomes apparent when the company's product is included in the clinical development of pharmaceutical companies, especially if a product developed with Genovis' technology goes all the way to market approval. In a previous interview with BioStock, Genovis CEO Fredrik Olsson revealed his view on the significance for sales potential if the company's new ADC technology can in the future not only be applied in preclinical research but also in the clinic:
- That would be enormous. To get an idea of the value, you can look at the licensing deals made by ImmunoGen and Seattle Genetics, which own the two technologies in the ADC area that are used today. Last year, Japan's Takeda signed a licensing agreement worth $230 million, of which $20 million was an upfront payment – per indication – to use ImmunoGen's ADC technology to develop antibody-based cancer treatments. Seattle Genetics has several ADC licensing agreements with AbbVie, Bayer, GSK, Pfizer and others that have so far generated more than $325 million in revenue and that, according to Seattle Genetics themselves, have the potential to generate many billions of dollars more in future milestone payments.
More licensing deals to come within ADC
In addition to the large deal between Takeda and ImmunoGen that Olsson refers to in the interview, Takeda recently made another deal in the ADC area. This time with South Korean LegoChem Biosciences. A speculative conclusion of the latest licensing deal with LegoChem is that Takeda is not completely satisfied with ImmunoGen's technology platform, and that it is now actively looking for next-generation ADC technologies. From this perspective, it will be particularly interesting to follow developments when Genovis rolls out its ADC technology in a broader launch, which we believe should be possible in 2017. It is also not entirely inconceivable that Takeda's competitors, i.e. some of the larger companies with which Genovis has already established collaborations, will be inspired to make similar licensing deals, in order to try to gain access to a new and innovative ADC technology that can increase predictability in the development of new antibody drugs, like Takeda.
In addition to the examples already mentioned above, as recently as February 13, a new collaboration within ADC was announced between LegoChem Biosciences and Swiss Novimmune, and just a few days earlier, on February 10, it was announced that Seattle Genetics and Immunomedics has entered into an agreement for a promising ADC drug in solid cancer tumors – an agreement that could bring Immunomedics up to $1,7 billion including an upfront payment of $250 million.
BioStock's comment: Strong historical growth – paving the way for greater impact
In its latest financial report for 2016, Genovis reported the strongest quarter in the company's history to date, in terms of sales. The third quarter was also the eighth consecutive quarter with increased revenues compared to the corresponding period last year. We believe that Genovis has a good chance of maintaining and strengthening this positive development in 2017, with its existing product portfolio as a stable base. With all the major pharmaceutical companies on its customer list, Genovis has already built a good reputation in the industry, which ensures that the company's products – existing and new – will continue to be well received by the market.
Today, Genovis' products are primarily used in preclinical development, but they are well positioned for the next step in development - if the strategy to establish the company's technology in customers' clinical drug development is successful, opportunities for greatly increased sales will open up.
Through the collaboration with Life Technologies on the GlyClick technology for labeling antibodies, Genovis has also created a strong position in a hot development area where we have seen several current and relevant reference deals. Overall, we believe that the conditions for an exciting 2017 for Genovis are clearly favorable.
The content of Biostock's news and analysis is independent, but Biostock's operations are to some extent financed by companies in the industry. This post refers to a company from which BioStock has received funding.
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