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Key business considerations when developing biosimilar products virtually.
Headquartered in Burgdorf, Switzerland, Finox Biotech was founded in late 2007, but interestingly not by pharmaceutical development professionals. Nevertheless, the company has made considerable progress in developing its first biosimilar. Afolia, a recombinant-human follicle-stimulating hormone, was taken on the journey from cell bank to the end of Phase III clinical trials within just four years. In this article, the cofounder and CEO of Finox Biotech, Anjan Selz, shares insight into the company's approach to biosimilar development.
Biosimilars are a hot item in the pharmaceutical industry; many companies, no matter the size or focus, are venturing into the space. Some people give the impression that filling a pipeline with any compound is more important than having a carefully chosen selection of targets to fit an overall strategy. How else could one explain the fact that there are still new erythropoieitin (EPO) biosimilars being developed for the European market despite the fact that the first such biosimilar was approved by EMA in 2006?
For a small start-up company, such as Finox Biotech, careful target selection is crucial because it often decides the fate of the company; the first compound will either be the sound foundation on which to build further product offerings or bring the company to its knees.
In fact, Finox Biotech was offered an EPO for consideration shortly after its establishment, but the company turned down the opportunity for two reasons. First, the timing was bad; in late 2007 there were already several EPO biosimilars on the European market or about to enter it. Second, Finox Biotech had a keen awareness of with whom we would be competing. EPO is a blockbuster and therefore attractive to large established companies; as a small start-up it would have been difficult to compete. Therefore, the company chose to focus on opportunities in markets that were still worth the heavy investment required for biosimilar development, but at the same time used compounds that were below the radar of most large companies.
Today, it seems that almost everybody wants to move into monoclonal antibody (mAb) biosimilars, which is understandable given the high originator turnovers in the respective therapy fields being threatened by the loss of patent protection. But where there is high turnover, there is strong competition. Perhaps more important, the development complexities involved in such large biologics poses a huge challenge. Whereas the full characterization and comparability exercises required for a small biologic such as r-FSH seem feasible to a start-up company, it can be quite difficult to take on mAbs considering their inherent complexity and the reliability risks associated with their huge clinical-trials.
Yet, more important criteria for target selection are the intellectual property (IP) and regulatory landscapes for a given compound. If regulatory expectations for a given target or class of targets are not clear, it can be too risky to invest millions in product development. If by chance, one manages to match authority expectations, it would be even more frustrating to fall from such heights when market success is not decided on the prescribing physician's desk but on that of a patent lawyer because of a fuzzy IP landscape.
Last but not least, a crucial criterion for target selection is the opportunity for product differentiation. Industry discussions on biosimilar differentiation far too often center on price alone. However, in many therapeutic fields—especially in prescription drug products and in the absence of automatic product substitution mechanisms—the prescription decision is more complex and based on factors other than price. Biosimilars, for example, may not be big sellers when only if they are given a markdown of just 20–30% compared with the originator product. The biosimilars industry can hurt itself heavily in the long-term with price-focused competition. Having invested substantial sums for development, registration and marketing of a biosimilar, a negative spiral of continuous markdowns with subsequent and incessant eroding margins is definitely not the investor's first choice.
Finox Biotech is organized as a "virtual" biotech. The company has no internal development or production capacities and in-sources these within a network of partners. The team consists of about 5.5 full-time equivalents. The company's operations are, therefore, fully focused on the identification, commissioning, leadership, and supervision of external partners. The selection of partners is highly crucial to the company's success.
With only a relatively small amount of business to propose, one may conclude that it is difficult to foster interest with qualified potential partners, small or large. However, given the appetite of contract developers and manufacturers for gaining a biosimilar track record, reality proves the opposite to be true. But care must be taken, because some contract organizations find it difficult to internalize the different needs of biosimilar development compared with new compound development. The latter is primarily about research (with long timelines and trial and error loops), but biosimilar projects are much more about straightforward development on short timelines and scarce budgets.
For small organizations such as Finox Biotech, it is important to find partners that match these focused structures. They may be small (or large) companies who have organized themselves into small entrepreneurial units with whom to interact. A large organization with steep or abyssal hierarchies and a crowd of people interfacing on common business issues would overburden the capacities of a small start-up. Furthermore, in a virtual development and supply setup, it is essential that the resulting network becomes a real entity. For biologics, "the process is the product," so in a virtual development and product supply chain, the implementation of this vision becomes even more crucial to turn out a sound product. A virtual company requires partners who fully understand the implication of this vision. All partners must also buy into the overall responsibility, as it is not feasible for a small core team to oversee and guide every detail in the interface between two external partners.
Biosimilar development is not about conducting breakthrough research. Rather, it is about hitting the ground running and pressing the fast-forward button by using existing technologies to ensure first-in-class market access. Swift execution also incorporates the need to accept that some options must be left aside so as not to slow the overall process.
Product development is complex; it involves many specialists and must address wide-ranging issues, so a big danger lies in inappropriate decision-making. Too often, a good head start is lost because managers are unable to agree on an idea that should be skipped to stay focused and in fast forward mode. Dragging along too many alternatives and slowing down the development process often results from one poor project manager being charged with full responsibility while others sit and watch the project branch-off down the wrong track.
At Finox Biotech, the project manager is neither in charge nor left alone. In fact, a broad management team takes responsibility for achieving overall development goals. This is all the more important given that a single project manager cannot usually cope with the multiple strategic issues that occur in biosimilar development.
The ever-evolving quality and regulatory landscapes need to be continuously integrated into product development strategy formulation and execution. The IP environment must also be followed closely with product development adapted accordingly. Attention must be paid to what is coming off patent but also, and perhaps more importantly, to what is going on patent, which is potentially one of the more damaging defensive
strategies of originator companies against biosimilar competitors. Last but not least, the cost of goods sold (COGS) will be one major enabler of competitiveness and the project manager alone will have difficulties in presenting a satisfying result if he alone is managing COGS.
Overall, during product development, there needs to be a spirit of execution that enables a high decision-making rhythm as well as a sense of maintaining focus on the essential attributes that the final product offering should present. One must not waste time and dissipate energy on a set of alternative opportunities.
Product development should be supported by constant confirmatory exchanges with regulatory authorities. Biosimilars are a nascent class of products, so authorities learn alongside companies developing products in this field. Accordingly, authorities' expectations evolve during product development and an agreement sought some time ago may not reflect the expectations in the future.
Be it FDA or EMA, both agencies provide supportive instruments for ensuring development progress, according to the respective guideline indications. Indeed, both agencies share the company's overall goals of bringing safe, efficient and affordable medicines to patients. However, sometimes the detailed understanding of what is required to achieve this overall goal may differ between the company and the agency. Finox Biotech's experience is that it is worth challenging agency requests. Sometimes, one might want to take an alternative route than what the agency proposed to achieve a certain goal. Our experience shows that if a different approach is scientifically justified, the agencies are open to negotiation. Sometimes it is worth saying "no" in order to achieve a more attractive, commonly agreed upon "yes" thereafter.
A biosimilar, by definition, should not differ from the reference product in terms of safety and efficacy criteria. That said, there are many opportunities for product differentiation beyond price. To avoid the danger of price-only competition and ever-eroding margins, the biosimilar under development needs to embody a different set of values.
In many cases, the originator product was developed some years ago with technologies of that time. Current technologies may allow improvements for a biosimilar. For example, with regards to formulation, using today's state of the art excipients could lead to improved product stability or reduce undesired product aspects. When communicating with prescribing physicians, one may find that packaging sizes or dose volumes of the originator product no longer match clinical practice, so a biosimilar can differentiate itself by addressing these issues. Over the past two decades there have also been many improvements realized in the area of medical technologies, so there is potential for biosimilars to take advantage of state of the art delivery devices.
If a thorough differentiation approach is followed, the product can gain its own character. Add a brand to represent this specific character and it becomes a value-adding, branded pharma product rather than representing a same-but-less-expensive generic product. Not only will the prescribing physician better recognize the product, but investors are also likely to be happier in the end.
It is clear that reducing time-to-market is one of the most important criteria in biosimilar development, but under no circumstances should shortcuts be taken. One pillar of success is the credibility that can be built up through solid product development, especially for an unknown startup, such as Finox Biotech.
The first "customer" of a product will be the regulatory authorities because they will judge product adequacy for approval. The previously recommended continuous involvement of such authorities in the development process—from the start when drawing the overall development plan to the end when preparing submission documents—will be the essential for maintaining credibility with agencies. The agreements made and the recommendations given during these interactions should be followed precisely. It is possible to further enhance credibility by going the extra mile or one step beyond agreed goals; typically adding only marginal costs and time to the development program the return is much enhanced product credibility. For example, one may choose slightly smaller acceptance margins than previously agreed, the power for the clinical trial may be higher than widely accepted 80%, or trials can be given to those with the highest academic rigor.
The second group of customers—the prescribing physicians—must also be convinced of the product's credibility. Similarity to the reference product is a prerequisite for a biosimilar and essential for approval, so there is no marketing argument to be made on efficacy or safety. Therefore, one needs to go beyond similarities by adding value and differentiated product characteristics in line with a scientifically sound, comprehensible and credible product-development story.
A common defensive strategy used by originator companies against biosimilars is unfounded suggestions as to the questionable source and background of such products. Company representatives love to poetically provide imagery of a backyard–underground lab where, under suspicious conditions, the biosimilar competitor is produced. The same negative insinuation is used for non-clinical and clinical development. In reality, biosimilars in highly regulated markets are produced using state-of-the-art processes, while satisfying the current, highest quality standards and are justifiably at least as good as originator products. In some aspects, biosimilars may be even better than originator products based on the fact that
they are developed and regulated with current knowledge. Therefore, it is the biosimilar industry's task to deliver this message to the market, a task best done through products that satisfy the toughest standards and thus gain the highest credibility.
Being part of a nascent industry is exciting, but there is a necessity to continuously adapt to a changing environment and to help shape the industry for the good of its players. Finox Biotech has not yet proven its success, but the company aims to do so by applying the recommendations noted herein.
Only by careful target selection with deep consideration over strengths and weaknesses can one bring about an attractive business case. In a virtual set-up, such a business case can only be translated into product success by carefully choosing the right network of partners. Special attention needs to be paid to the creation of overall product understanding and commitment among selected external partners to satisfy the credo that "the process is the product."
Reduced time-to-market and low cost of goods are essential for biosimilar competitiveness, so it is crucial to form a spirit of swift execution and a strong awareness of essential product attributes rather than wasting time on alternative options. Last but not least, to avoid competition on price alone, a biosimilar must exhibit value-adding characteristics to differentiate it from the reference product. If all of these ingredients are mixed together in the most demanding development environment, answering to the highest standards, a credible and attractive product will emerge.
This article is part of a new series on Basic Training for Drug Development and Manufacture, providing business and technical guides for taking drugs from discovery to development. Send ideas and contributions to the editor at firstname.lastname@example.org.
Anjan Selz is CEO and co-founder of Finox Biotech.