Strides Plans Injectables Re-entry As Mylan Non-Compete Nears End
Executive Summary
Indian firm Strides to invest up to $40m in acquired Stelis for re-entry into generic injectables and multiple biosimilar APIs as it looks to build its business.
Strides Pharma Science Ltd. (earlier known as Strides Pharma Inc. ) plans to invest up to $40m for a controlling stake in Indian firm Stelis Biopharma Pvt. Ltd. in a strategic move to gain re-entry into the injectable generics business and capitalize on the latter’s imminent growth prospects.
While Strides currently holds around 43% in Stelis, its stake in the biopharmaceutical company has fluctuated over the years. The current fund infusion, spread over two years, aims to once again give Strides a controlling shareholding of at least 51% and a resultant re-entry into the generics injectables space it had exited in 2013.
Strides sold its generics injectables business, spun off from the main company as Agila Specialties Pvt. Ltd., to Mylan NV for $1.65bn in 2013. Agila had contributed nearly 60% of Strides’ 2012 sales and was considered the star of its stable. A non-compete agreement with Mylan from that time expires in December this year. (Also see "Deals Shaping The Medical Industry, April 2013" - In Vivo, 1 Apr, 2013.)
In the wake of the Stelis move, it now aims to launch “a basket of niche products” in the sterile injectables space, leveraging the group’s experience in this field.
Production Plans
Stelis has so far invested $160m in manufacturing units, product development and commercial readiness of its pipeline, while commercial production is yet to begin. It plans to make sterile injectables and biopharmaceuticals apart from providing contract development and manufacturing, as well as biologics research services.
A 200,000 sq ft integrated bio-manufacturing facility catering to biologic active pharmaceutical ingredients (APIs) and aseptically filled injectables is yet to be commissioned. While the drug product (formulations) block is ready for commercial operations, the drug substance (biologic APIs) block is under installation and validation. Alongside, a 30,000 sq ft research facility in Bengaluru is ready to go.
Strides did not respond to repeated e-mail requests for details on Stelis’ manufacturing plans. However, the latter has built capacity to manufacture 1,910kg of APIs per annum and 15.3 million units of formulations at its Bengaluru plant, its website reveals. It can manufacture 3.6 million unit cartridges, 2.7 million prefilled syringes and nine million vials and lyophilized vials.
While 136 APIs are on the list of products that Stelis can manufacture, a large part by volume centers around insulin variations – glargine, lispro, aspart, Rh-insulin, deglutec, detemir and glulisine.
The other major products planned are bevacizumab, aflibercept, filgrastim, adalimumab, hyaluronic acid and streptokinase.
Aflibercept injection is indicated for neovascular age-related macular degeneration, while filgrastim tackles neutropenia caused by cancer medicines while hyaluronic acid is used to treat knee pain caused by osteoarthritis.
Adalimumab is a TNF blocker that reduces inflammation and treats several conditions like ulcerative colitis, psoriatic and rheumatoid arthritis, plaque psoriasis, ankylosing spondylitis and Crohn’s disease. Streptokinase, an enzyme and thrombolytic medication is used to break down clots in pulmonary embolism, myocardial infarction and arterial thromboembolism.
The actual product mix will depend on market dynamics like demand-supply, manufacturing or marketing partnerships and other opportunities that Strides sees once commercial production begins.
Market Environment For Injectables
In India, Mylan has received Phase III approval for its proposed biosimilar (MYL-1701P) to aflibercept injection commercialized by Regeneron Pharmaceuticals Inc./Bayer AG as Eylea. The biosimilar, being developed in collaboration with Momenta Pharmaceuticals Inc., entered Phase III internationally last year and the Indian studies are expected to be part of these trials. (Also see "Mylan's Aflibercept Biosimilar Gets Green Light For Trials In India" - Generics Bulletin, 11 Sep, 2019.)
However, India won’t be the only market that Stelis will be interested in given that its mission statement is to develop and manufacture affordable bio-therapeutics to address global unmet needs, and it intends to enter into in- and out-licensing partnerships to meet these.
Higher product margins in developed economies like the US and Europe have historically lured Indian companies and given that parent company Strides has built some expertise in tapping these markets, Stelis would likely follow suit.
A shortage of injectables supplies in the US market could be an encouraging factor. Mainly catered for by three manufacturers – Pfizer Inc.’s Hospira Inc., Fresenius Kabi AG and Hikma Pharmaceuticals PLC – this geography recently saw Hikma tying up with hospitals and their group purchasing organizations to close the gap.
Hikma CEO Siggi Olafsson had said the 100 or so reported injectables shortages were encouraging purchasing groups to work closely with strong, reliable suppliers to alleviate these problems. (Also see "Hikma Starts Seeing Benefits Of Stepping In On US Shortages" - Generics Bulletin, 26 Sep, 2019.)
Meanwhile, there is a growing feeling that large pharmaceutical companies might not find biosimilars lucrative enough to stay in the business. Steep development costs, cautiousness in regulatory approvals, higher product costs versus existing solutions and increasing competition might just lead to big pharma abandoning their biosimilar programs. At such a juncture, whether a company like Stelis will be able to step in remains to be seen. (Also see "US Biosimilar Market – Who's In It For The Long Haul?" - Scrip, 2 Oct, 2019.)
Development Milestones
Apart from injectables, Stelis is banking on biopharmaceuticals for growth. Incremental Phase III clinical studies in the US for SBL001, a drug to treat osteoporosis, and SBL005 for treating osteoarthritis are expected to be complete by end-2020. The market opportunity for each is seen at around $2bn.
It had earlier expected a global launch of SBL005 in 2018 and SBL001 in 2019. However, SBL005’s launch date has been pushed back by regulation to classify this product as a drug instead of a device. A re-classification means fresh/further filings and consequently a longer time to market.
| Drug Name | Indication | Type | Progress Update by country/region | |||
| US | EU | Australia | Emerging markets | |||
| SBL001 | Osteoporosis | Biosimilar | Phase III incremental studies by end-2020 | In talks for licensing partnerships -Phase III clinical study waived. | Phase I clinical study complete | Not available |
| SBL005 | Osteoarthritis | Medical device/drug | Phase III incremental studies by end-2020 | Phase III incremental studies by end-2020 | Not available | Dossiers under filing |
An integrated platform for insulin and insulin analog is in early stages of development and offers the promise of making insulin more affordable and accessible. Stelis’s R&D and clinical strategy for insulins are designed for the global markets, it said.
Revenue Projections
Stelis is expected to turn earnings per share-positive from this year to March 2022, Strides said. Post the infusion of up to $40m by Strides in Stelis and further investments by other equity partners, the latter will be able to break even at the operational level in 18 months.
The company’s CDMO (contract development, manufacturing organization) services for aseptic fill-finish in various injectable formats have gained attention from global companies and a maiden contract is expected to result in revenue this year (fiscal 2020) on.
Even the biologics research business is seen generating revenues from financial year ending 31 March 2021. Stelis’ biologics research services focus primarily on the development and commercialization of biosimilars, biobetters and new biological entities. It can support microbial and mammalian process developmental activities in therapeutic proteins and monoclonal antibodies for the early- and late stage including scale-up, clinical material preparation and stability studies.
Further Investments
Even as Strides invests up to $40m, the other equity partners - Strides promoter and Arun Kumar-owned company Tenshi Life Sciences and Jordanian investment group GMS Holdings - are also planning additional investments in Stelis.
Strides’ stake has been in a state of flux after it acquired Inbiopro Solutions Pvt. Ltd. in 2012 and then renamed it Stelis. In 2016, Jordanian investment group GMS Holdings was brought in as a partner and in 2017, Tenshi Life Sciences acquired a stake.
Strides declined comment on stake changes at Stelis post "pending equity commitments from the other partners." How the spoils will be split between a publicly-listed company and private stakeholders once Stelis begins making consistent profits will form an interesting backdrop to a party that is yet to begin.