Biosimilar development in a virtual biotech set-up - Part I

Headquartered in Burgdorf, Switzerland, Finox Biotech was founded late in 2007, but interestingly not by pharma development professionals. Nevertheless, the company has made considerable progress in developing its first biosimilar. Remarkably, Afolia, a recombinant-human follicle-stimulating hormone, was taken on the journey from cell bank to the end of Phase III clinical trials within only four years. It is possible that the specific mix of people and processes set up by Finox made such headway feasible. In this article, the co-founder and CEO of Finox Biotech shares insight into their approach to biosimilar development.

Target selection

Biosimilars are a hot topic in the pharmaceutical industry with many companies venturing into the space whether very large originator companies or generics firms. 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 the EMA in 2006?

For a small start-up company, such as Finox Biotech, careful target selection is crucial as it very often decides the fate of the company; the first compound will either be the sound foundation on which to build further product offerings or only serve to bring the company to its knees.

In fact, in the beginning, Finox Biotech was offered an EPO for consideration, but the company denied 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. Being among the first to enter a market is fun because you rank higher than other market participants in terms grabbing a prescribing physician’s attention. Being number 7 or 12 is less fun. The second reason for declining the EPO opportunity was a keen awareness of with whom we would be competing. EPO is a blockbuster and hence attractive to large established companies; as a small ‘no-name’ start-up it would be very difficult to compete at this level. Therefore, Finox Biotech 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 big 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 importantly, the development complexities involved in such large biologics is a big 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 seems almost foolish to consider MAbs with their inherent complexity and the reliability risks associated with the resulting data from 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—a blind flight rarely arrives on target. And 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 very important 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—definitely in prescription drug products and especially in the absence of automatic product substitution mechanisms—the prescription decision is more complex and based on factors other than price. Biosimilars will not be big sellers when only given a markdown of 20 to 30% compared with the originator product. The biosimilars industry hurts 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.

Partner selection

Finox Biotech is organized as a so-called virtual biotech. The company has no internal development or production capacities and in-sources these within a network of partners. Actually, 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 therefore highly crucial to the company’s success.

With only a relatively small amount of business to propose, you 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, as some contract organizations find it very 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 critical to turn out a sound product. One requires partners who fully understand the implication of this vision and let the previous and the consecutive partner in the chain access activities to create smooth interfacing. 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. These companies need to interconnect of their own accord—a signal that they have internalized the overall product understanding and commitment.

In Part II, Anjan Selz focuses on the product itself, offering candid insight into development, differentiation, and credibility.

Podcast 1 on biosimilar candidate choice and outsourcing

Podcast 2 on meeting regulatory expectations

Podcast 3 on product differentiation