Posted on July 5th, 2013
by Paul Ashton, Ph.D.
It is sometimes said that it takes 30 years to assess the impact of a revolution. That’s probably true of the French, Russian and American ones. It’s also true for the Biotech revolution. We are 30 or more years into the Biotech revolution and so far there have been many successes and, inevitably, some of the wider-eyed claims remain science fiction (although that hardly is a barrier for some companies’ often successful sales pitches). So, what are some of the lessons?
Along with the successes and failures there are also some intriguing issues that perhaps few people saw coming, such as patent expirations and BioSimilars. It’s estimated that there is over $80B of patent protection expiring on biologics over the next eight years and yet the generic competition is lagging. The problem for generics is that no one really knows the exact structure of a protein, and thus even when a patent expires it’s impossible to show that a “generic” version of a biologic is exactly the same as the existing, marketed product. Hence these generic versions of Biologics are not considered the same, but are “BioSimilar.” A generic player must therefore take their version of a Biologic through extensive clinical testing and at the end of this testing, even if successful, they likely won’t get generic substitution so the generic model doesn’t quite work. This is a problem since it essentially stifles competition from the generic players. It also reduces the drive for innovation by the originator, if a Biologic works reasonably well, and there is little danger of competition (despite patent expiration) there really isn’t much drive to make an improved version. The innovator company already owns the market, so making something even better isn’t going to improve that. Fortunately some companies are able to navigate the BioSimilar path, primarily in Europe where the regulatory systems rules lend themselves to this a bit more readily. Given some of the high cost and limited return of developing a BioSimilar product some companies are looking to make biologics that are slightly better than the original versions (so called “BioBetters”). The development costs are likely to similar to developing a BioSimilar, but the upside is better since a BioBetter would be able to effectively compete against the original drug. Let’s summarize some of these points: 1) Biologics are hard to deliver leading to sub-optimal outcomes; 2) a lot of patent coverage on Biologics is expiring; 3) the traditional generic approach is difficult; due to cost and limited up-side. The BioBetter approach may be much more attractive. Biological “generics” will have to offer an improvement. This adds up to an enormous opportunity for drug delivery. All of this neatly fits into the equation I’ve posted before, remember: Therapy Gap + (Current Drug X Technology) = Transformational Change The “Therapy Gap” arises from the difficulty in delivering Biologics. The “Current Drug” part of the equation comes from the patent expiration and competing similar drugs. The piece that seems to be largely missing at the moment is Technology, since no one can deliver Biologics. This may not last long. The commercial drive is there already with another $80B incentive coming soon. This is going to be felt by both originator companies who must protect their biologic from BioSimilar/BioBetter competition and the generics companies who need to go a step beyond their normal model. I think pSivida’s Tethadur technology may be one of the very few technologies that can provide sustained release of these molecules. Companies who can provide the “Technology” (i.e. an ability to deliver biologics) that leads to Transformational Change are likely to do extremely well. Hopefully we’ll be one of them!
Forward Looking Statements
SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Various statements made in this blog are forward-looking, and are inherently subject to risks, uncertainties and potentially inaccurate assumptions. All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements. The following are some of the factors that could cause actual results to differ materially from the anticipated results or other expectations expressed, anticipated or implied in our forward-looking statements: uncertainties with respect to: Alimera's ability to obtain regulatory approval for ILUVIEN for DME in the U.S. through the advisory committee or otherwise, and if approved, to finance, successfully commercialize and achieve market acceptance of, and generate revenues to pSivida from, ILUVIEN for DME in the U.S.; Alimera's ability to finance, achieve additional marketing approvals, successfully complete pricing and reimbursement discussions for, commercialize and achieve market acceptance of, and generate revenues to pSivida from, ILUVIEN for DME in the EU;; the ability to finance, complete and achieve a successful outcome for Phase III trials for, and file and achieve marketing approvals for, Medidur for posterior uveitis, including efficacy, side effects and risk/benefit profile, as well as uncertainty as to the ultimate results of the investigator-sponsored trial for Medidur for posterior uveitis; initiation, financing and success of Latanoprost Product Phase II trials and exercise by Pfizer of its option; ability to utilize Tethadur and BioSilicon to develop product candidates and products and potential related collaborations; initiation and completion of clinical trials and obtaining regulatory approval of product candidates; continued sales of Retisert; adverse side effects; ability to attain profitability; ability to obtain additional capital; further impairment of intangible assets; fluctuations in operating results; decline in royalty income; ability to, and to find partners to, develop and market products; termination of license agreements; competition and other developments affecting sales of products; market acceptance; protection of intellectual property and avoiding intellectual property infringement; retention of key personnel; product liability; consolidation in the pharmaceutical and biotechnology industries; compliance with environmental laws; manufacturing risks; risks and costs of international business operations; credit and financial market conditions; legislative or regulatory changes; volatility of stock price; possible dilution; absence of dividends; and other factors described in our filings with the SEC. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Our forward-looking statements speak only as of the dates on which they are made. We do not undertake any obligation to publicly update or revise our forward-looking statements even if experience or future changes makes it clear that any projected results expressed or implied in such statements will not be realized.