Onward Ho: Biocon Signals Glargine Build Up, US Biosimilars Pricing ‘Sanity’
Executive Summary
Biocon anticipates significant US uptake of its Viatris-partnered interchangeable insulin glargine biosimilar on the back of commercial arrangements in place and expects to "move the market" in 2022. All eyes are also on the trajectory of biosimilar insulin aspart, which received a CRL from the US FDA.
Supplies of Biocon, Ltd.’s partnered interchangeable insulin glargine biosimilar (branded Semglee) buoyed earnings momentum for the Indian firm’s biosimilars business in the fiscal third quarter, with “significant uptake” in store in view of several commercial arrangements already in place in the US.
Biocon Biologics’ deputy CEO Shreehas Tambe highlighted recent gains made by partner Viatris Inc. for the product, which received preferred status with Express Scripts in the formulary contracting cycle. This ensured a status “displacing [Sanofi’s] Lantus,” the preferred brand until then. (Also see "First Interchangeable Biosimilar Launched In US" - Generics Bulletin, 16 Nov, 2021.)
“We've be able to displace some of the incumbents and moved them out from that preferred status. We really see 2022 as a place where we'll be in a position to move the market in the manner that we projected, ” Tambe said at the earnings call for the fiscal third quarter ended 31 December 2021.
Biocon and Viatris’ insulin glargine biosimilar had earlier received preferred status in the national formularies of Prime Therapeutics and Express Scripts and will also be offered through Walgreens Prescription Savings Club. The partners got a further boost after the US Court of Appeals for the Federal Circuit recently ruled in Viatris’ favour and affirmed the US Patent and Trademark Appeal Board’s prior rulings that found the challenged claims of five device patents for Sanofi’s Lantus SoloSTAR unpatentable. (Also see "US Court Rules In Favor Of Viatris For Interchangeable Semglee" - Generics Bulletin, 7 Jan, 2022.)
Bernstein analysts indicated that a quick look at the various plans administered by Express Scripts and Prime Therapeutics suggested that Semglee had preferred status for “~20% of commercial lives and no lives in Medicare” which is ~8-9% of total insured lives in the US.
“We expect a sharp ramp up to 7-8% market share in 2022 (from 2.5% in 2021) with some support from biosmilar aspart and biosimilar bevacizumab later in the year in US depending on approval timing,” Bernstein analyst Nithya Balasubramanian said in a quick take post results on 21 January.
Sequential Q3 growth in the Biocon’s biosimilars arm, Biocon Biologics, came on the back of the commencement of supplies of interchangeable insulin glargine for the US markets. “We see that picking up as we go into 2022. And, of course, the profit shares that will flow through, as this converts into in-market sales,” said M B Chinappa, Biocon’s chief financial officer.
Biocon Biologics reported revenues of INR9.81bn ($131m) in Q3 FY2022, up 28% year-on-year and 32% quarter-on-quarter; the business also saw robust demand for its products across geographies. Fiscal 2022 is the 12-month period ending 31 March 2022.
Biocon’s consolidated Q3FY22 revenues grew by 18% year-on-year to INR22.23bn, driven by a strong performance across all business segments. Net Profit stood at INR1.87bn versus INR1.69bn in Q3FY21.
Aspart Complete Response Letter
Investors are also closely tracking the progress of another partnered product, insulin aspart.
Biocon and Vitaris recently received a complete response letter from the US Food and Drug Administration for their biosimilar rival to NovoLog (insulin aspart), which Tambe explained was essentially due to a diluent-related issue and also around the updates on the inspection that were provided to the agency in terms of CAPA (Corrective and Preventive Actions) responses. (Also see "Biocon And Viatris Get CRL From FDA On Insulin Aspart" - Generics Bulletin, 10 Jan, 2022.)
The company has been in correspondence and dialog with the agency on these, which are currently ongoing. “Once we're done with that, we should have a clearer picture how we will be able to and how quickly we will be able to resolve the CRL,” Tambe said in response to an analyst’s question.
Bernstein underscored that a mid-year approval is “critical” to participate in the “2023 coverage negotiations.”
The US FDA had conducted an on-site pre-approval inspection of Biocon’s Malaysian subsidiary Biocon Sdn. Bhd’s manufacturing facility for insulin aspart between 13 September and 24 September 2021, which resulted in a Form 483 with six observations across drug substance, drug product and devices facilities. At the time, Biocon maintained that its US commercialization plans for the biosimilar would be unaffected by the development.
US Pricing 'Sanity'
Biocon’s senior management also outlined the wider price erosion-related dynamics for biosimilars across global markets, with Tambe noting that the US has been a more “accommodating, steady” market where “price sanity” has prevailed overall.
“Basically, between Viatris and us our strategy has been to preserve value as we've gone through; we’ve not chased market share in pursuit of that, we have not eroded value like many others. We continue to hold on to that and our market shares have been steady in that 8-10% range whether it is in Fulphila [pegfilgrastim-jmdb] or whether it is in Ogivri [trastuzumab-dkst],” Tambe declared.
Europe, though, is a heterogeneous market, the executive underscored, noting that there are several market archetypes. Where there is a single win tender, particularly in the Nordics, there’s typically a more aggressive pricing trend and there you could see someone take a “winner-takes-all” kind of a strategy, and then there is more aggressive pricing in such markets in certain cases.
In most other markets in Europe, there are also mandated price reductions year-on-year once there's a first biosimilar launch.
“Some of these are predicated, some are pre-decided. And we have seen that, given that there is a 10% to 25% reduction, which you'd have factored in, the market remains in line with where we had expected it to move,” Tambe explained.
Interestingly, the executive maintained that emerging markets sometimes “have surprised us” with the kind of price that they've held on to. “So on the whole, I would say, price erosion is along the expected lines and really something that biosimilars were expected to do - as a basic principle - to bring them into the market.”
In Q3, Biocon Biologics-led business in emerging markets, including India, recorded double-digit growth, driven by the existing portfolio of biosimilar trastuzumab and insulins across all regions AFMET (Africa, Middle East and Turkey), Asia Pacific and Latin America.
“We are progressing well with our biosimilar bevacizumab since its EU approval in April 2021 and have signed partnership agreements in 20 emerging markets during FY2022 and continue to file for approval in several other countries,” the company said.
Biocon’s senior management, though, did not make any specific comment on speculation that the company and Mylan (now Viatris) may be evaluating plans for a bigger combined framework for their already intertwined biosimilars business. (Also see "Biocon-Viatris Biosimilars Combine: Deal Or No Deal?" - Scrip, 10 Dec, 2021.)
Alliance With Serum
Meanwhile the company also remained upbeat about its strategic alliance with Serum Institute of India Pvt. Ltd., which involves a merger of the Pune-based group’s arm Covishield Technologies into Biocon Biologics and is on track. (Also see "Biocon Finalizes Merger Between Covidshield And Biologics Business" - Generics Bulletin, 18 Jan, 2022.)
Biocon anticipates very strong demand for the vaccine portfolio, initially with a bias towards the COVID-19 products then rolling into the next-generation vaccines and then progressively entering developed markets as part of the medium to long term plan.
“To convert that into financial terms, we believe that closer to the 100 million units it could translate close to $400m of revenues and profits, which are in line with our core EBITDA [earnings before interest, taxes, depreciation, and amortization] margin, which is in the mid- to high-30s,” chief financial officer Chinappa added on the earnings call. (Also see "More Indian Firms Dip Toes In Vaccines Segment: Just 'Opportunistic'?" - Scrip, 3 Jan, 2022.)
Under the deal with Serum, Biocon Biologics had received “committed access” to a 100 million doses of vaccines per annum for 15 years, essentially from Serum Institute Life Sciences Private Limited’s (SILS) upcoming vaccine facility in Pune with commercialization rights of the SILS vaccine portfolio, including COVID-19 vaccines, for global markets.
The alliance spans vaccines and also antibodies targeting several infectious diseases and the partners expect to build scale in these businesses and have a significant impact globally, particularly across emerging markets.