From The Editor | June 7, 2018

Considering A Future In Biosimilars: The Small Biotech Perspective

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By Anna Rose Welch, Editor, Biosimilar Development
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Considering A Future In Biosimilars: The Small Biotech Perspective

I recently interviewed Hubert Chen, chief medical and scientific officer of Pfenex, for the keynote address of the 2018 World Biosimilars Congress USA. Given Pfenex’s leadership in the follow-on biologics space and our fabulous interactions (past and present), I took the opportunity to welcome Chen and his scientific/executive brain to Biosimilar Development’s editorial board. In the upcoming weeks, I plan to write an article unpacking our discussion at the World Biosimilars Congress. But there were a couple of questions we didn’t get to address surrounding the challenges a small biotech company faces when navigating both the biosimilar and the innovative space. Given the diversity of players in the biosimilar space, I wanted to get a better sense of how smaller companies originally defined as biosimilar pure-plays, like Pfenex, are ensuring longevity in the biosimilars space.

Anna Rose Welch: What unique considerations does a smaller biosimilar company need to make when determining whether to invest more fully in novel drugs as the company begins to gain ground in the market?

Hubert Chen: A small company needs to be honest regarding its ambitions and limitations for each of its pipeline candidates. For instance, can it take an innovative candidate targeting fibrosis all the way to approval and commercialization, or does it need to find a partner after clinical proof-of-concept? Even for an orphan drug, does it want to build up a small sales and marketing department, along with the commercial quality and pharmacovigilance infrastructures? Can it compete against more established companies that are well-known to patients and prescribers in a certain disease area? These types of questions should be asked for every R & D program. Having a well-defined business plan ‒ with potential exit strategies arising from value-inflection points ‒ is essential from the beginning.

Welch: What aspects does a small company especially need to consider as it looks to invest in a future pipeline that includes biosimilars? What particular trends should experts in positions such as yours be watching that may influence or ultimately determine a small company’s future in biosimilars?

Chen: Biosimilars will become an important part of the pharmaceutical ecosystem. However, the speed at which this happens will depend on several factors. One frequently mentioned obstacle, interestingly, is that biosimilars are still not cheap enough and, as a result, payers have been reluctant to switch from originator drugs. While there are several factors that influence the pricing of biosimilars, I personally believe that achieving lower cost of goods sold, particularly through innovations in bioprocessing, will go a long way to facilitate biosimilar adoption. A relevant example I can share is the benefit that Pfenex derives from its proprietary protein expression technology, in which specific components of the platform were designed to maximize soluble protein production through genetic improvements in the protein-folding machinery of P. fluorescens. Therefore, we don’t need to incorporate certain bioprocessing steps, such as the extraction and re-folding of insoluble proteins, which might be more commonly encountered in E. Coli-based production systems. We believe technical advantages like this will translate into commercial advantages in the future.

Welch: In addition to biosimilars and its follow-on candidate to Forteo, Pfenex is working on innovative vaccines and biobetter oncology candidates. What are some of the challenges for a small biotech in having such a diversified focus? What are some of the benefits?

Chen: For a small biotech company, having a diversified pipeline that spans biosimilars, biobetters, and novel vaccines is like drinking from a firehose: there are tons of information to absorb, followed by a multitude of decisions – both strategic and tactical – that need to be made. We are always asking whether and how we can devote enough resources and identify appropriate subject matter experts to optimally develop each of these programs. For Pfenex specifically, this diversified approach is possible because of our protein expression technology, which historically has achieved >80% success rate when other production systems have failed. Given this track record, we figured it makes good business sense to leverage the platform to produce a broad range of therapeutic and vaccine candidates, from small peptides to large, complex proteins.

Welch: Business models obviously change over time, and as you consider the company’s future in the innovative and the biosimilar space, do see it being more heavily weighted to one side or the other? Why?

Chen: We have started to view ourselves more as a clinical-stage platform company that utilizes our technology to develop and improve protein therapies for unmet medical needs. In contrast, previously, we may have positioned ourselves more as a biosimilar company that happens to have a unique platform. A key motivation for this transition arises from our multiple non-biosimilar partnerships, such as the anthrax vaccine program funded by the U.S. government, or the novel oncology biobetter collaboration with Jazz Pharmaceuticals. As a result, we want to be viewed as being more than a biosimilars company, and we are actively seeking additional co-development/partnership opportunities outside of biosimilars.

Welch: So it seems like much of this decision is based on defining a company by its resources and capabilities, as opposed to the type of drugs it has in its pipeline?

Chen: I think either approach provides a legitimate framework to define a company’s mission. What is interesting to me is that two companies can undergo a similar exercise and end up with diametrically opposite conclusions. For example, you’ve recently shared insights on how TPI — a company with a novel biomanufacturing platform — decided to rebrand itself as a pure-play biosimilars company and renamed itself as Adello Biologics in the process. So, my takeaway is that there isn’t a right or wrong answer, but the outcome depends on the unique situation of each company at a particular time.

Welch: Do you feel Pfenex’s decision to enter the innovative space was influenced by any aspects of the biosimilar market or pharma industry culture today?

Chen: I think the slower-than-anticipated rate of biosimilars adoption in the U.S. played a role, and you published a thoughtful article on this topic by Christina Danosi and her colleagues at Trinity Partners recently. I recall that ~4 years ago, when I first joined Pfenex, everyone was convinced that the U.S. market for biosimilars was ready for vertical liftoff. Some of the most optimistic estimates even had projected a market size of >$5 billion by 2020. Contrast that with reality check in 2018: biosimilars have yet to become a disruptive force in the U.S. market. As a result, impatience from various stakeholders, including shareholders of pure-play biosimilars companies, is understandable. However, I still believe that biosimilars offer the ability to open access to essential treatment options for patients. Continued education and engagement of patients, providers, and payers will help to ensure that the biosimilar industry reaches its full potential in the U.S.

Welch: From a resource perspective, do you find that working in the innovative space provides you with the necessary capabilities to succeed in biosimilars, or are you finding you need slightly different capabilities?

Chen: At a high level, working in the innovative space requires the same functional building blocks as working in biosimilars: process development, analytical sciences, clinical development, regulatory affairs, CMC, quality, etc. However, there are significant differences in how these resources are utilized and which aspects are emphasized. For example, in biosimilar development, minimal effort may be needed to explore or justify new clinical endpoints, whereas most of the creative energy would go to negotiating abbreviated development strategies with regulators. Another good example would be the heavy emphasis on multiple state-of-the-art analytical methods to support biosimilar development, whereas in “traditional” innovative drug development, most of the resources would be devoted to nonclinical and clinical investigations. Understanding these nuances and being able to switch comfortably between these two different paradigms are important for a platform company to excel in both arenas.

Welch: What tools or resources could help a company “switch comfortably” between these two paradigms? Can something like this be itemized into a checklist, or is it more complex than that?

Chen: I recently came across a slide from Robert Salcedo at BioSciencesCorp, in which 15 “lessons learned from early biosimilar adopters” were shared. I wish I had the list as a resource when I first joined the biosimilars industry! All of the issues need to be addressed by innovative drug developers as well, but because of the compressed, accelerated development timeline for biosimilars, they take on extra importance and urgency, and missteps are less forgiving. This, I believe, is an important distinction between the two development paradigms.