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Angelo DePalma explores how many pharma firms are focusing on improved molecules, or biobetters, to optimize existing portfolios and increase market share

By Angelo DePalma on Oct 14, 2011

The term ‘biobetter was coined by G.V. Prasad, CEO of Dr. Reddy’s Laboratories, at a bio-investor’s conference in Mumbai in 2007.

Today, perhaps, Prasad is the only person on earth who knows what the term means.

Biobetters, also known as biosuperiors, are one of the three general types of follow-on biologic.

Where biosimilars are ‘generic’ versions that seek sameness and innovator drugs incorporate altered drug function while retaining familiar (but purposely not identical) chemical structure, biobetters fall somewhere in between. (For more on biosimilars, see ‘Forecasting the potential of the biosimilars market’ and ‘Forecasting the future of biosimilars’.)

Given today’s economic climate and regulatory aversion to risk, larger pharmaceutical and biotechnology firms are the most likely to succeed in biobetters.

Pfizer’s acquisition of Wyeth in 2009 was in good part due to a desire to compete in biobetters.

Its projects include two for improving Biogen Idec’s Rituxan lymphoma drug and another to increase the half-life of Enbrel, for treating rheumatoid arthritis.

Similarly, AstraZeneca’s $15 billion purchase of Medimmune was meant to sidestep biosimilars and focus on biobetters.

Other large-cap players include Merck, Lilly, Amgen, GlaxoSmithKline, and Aventis.

But with enabling technologies as diverse as they are, smaller players are also getting into the act, for example, Xencor, Itero Biopharmaceuticals, Femta, PolyTherics, Nexar, and iBIO. 

Biobetters are regulated as innovative drugs, typically requiring a full-blown Biologics Licence Application (BLA) in the United States.

Biosimilars, by contrast, may be approved through an abbreviated regulatory pathway and marketed based on its similarities to the original molecule.

In practice, regulators will probably treat all three follow-on types as innovative medicines, at least early on.

Marketing and sales efforts will be highest for innovator and biobetter drugs, but still substantial for biosimilars.

Regardless of the approval path, time-to-market benefits and cost savings typical of generics are inaccessible for biobetters.

Development strategies

Biobetter development strategies fall into three basic categories: changes in chemistry, alterations in formulation, and innovative delivery.

Within these treatments lie numerous individual tactical plays, such as modifying the FC region of an antibody to slow degradation and improve half-life, altering glycosylation to improve immunogenicity or duration of effect, attaching stabilizing structures like polyethylene glycol, needle-free injection, and pill-for-injectible switches.

“The possibilities are limited only by the creativity of marketing people,” says Ronny Gal, senior analyst at Bernstein Global Wealth Management in New York.

Changing the delivery route is arguably the most straightforward regulatory pathway for biobetters.

Switches to pills or patches from injectible dosage forms, or to needle-free injections, are tried-and-true techniques.

But abbreviated approval trajectories can never be assumed for biologicals.

“It’s not as simple as, ‘Here’s an approved device. Here’s an approved drug. Put them together and go,’” observes Paul Wotton, president and CEO of Antares Pharma.

Antares supplies TJet®, a needle-free injector, for Teva Pharmaceuticals’ pediatric human growth hormone product.

Pfizer, Genentech, Serono, Lilly, and several smaller players, who divide $1.3 billion in sales per year, dominate this crowded market.

Teva’s original needle-based product had barely penetrated the US market after three years, with just 2% of sales.

Since adopting the Antares delivery system 18 months ago, market penetration has doubled.

In 2009, Antares interviewed executives at 25 pharmaceutical and biotechnology companies, including blue chips, generics manufacturers, and development-stage firms.

According to Wotton, all anticipated that devices would become increasingly important in the creation of biological therapeutics.

If these data hold, then biobetters should be a boon to formulation and delivery companies.

Yet a good deal of this exciting technology remains unexploited.

“We were developing injection technology for peptides and proteins 20 years ago, but it has taken all this time for the pharmaceutical product market to catch up,” says Wotton.

A related biobetter strategy, combining drugs, is a favorite of John Plachetka, CEO of Pozen, who notes, “Almost all drugs are non-optimized.”

He cites a recent editorial by Dr. Janet Woodcock, who heads the FDA’s Center for Drug Evaluation and Research, in the New England Journal of Medicine.

Woodcock observed that the greatest advances in infectious diseases and cancer therapies resulted from the combination of two or more agents administered simultaneously.

Her agency has issued draft documents urging drug developers to consider this approach.

This same strategy, which has made AIDS a manageable disease, says Plachetka, is under-exploited with biologicals, with the exception of anti-cancer monoclonal antibodies (Mabs), which are frequently administered with standard chemotherapy agents.

“The time has come to abandon the silver-bullet theory for a more practical approach that recognizes the multi-factorial nature of disease,” he says.

Biobetters versus innovative biologicals

A good deal of fuzziness exists in the realm separating “optimization” (biobetters) from chemical synthesis (innovative biologicals).

Few could argue that altering a protein’s chemical backbone, even by one or two amino acids, does not create a new molecule, yet these fall under the biobetter category.

Maxygen employs a molecular technique, MolecularBreeding™, to shuffle a protein’s building blocks and combines these with add-on strategies like PEGylation.

Its clinical-stage portfolio includes a white blood cell-boosting improvement on Neulasta, which is currently in phase II, an improvement on a Novo Nordisk clotting factor in late phase I and a mutated version of Bristol-Myers Squbb’s Orencia arthritis drug in early preclinical evaluation.

Markets for the three originator molecules total $4 billion per year.

Maxygen’s mantra, enunciated at a recent Goldman Sachs conference, is “any protein can be optimized.”

Similarly, antibody fragments are at the cutting edge of biobetters.

These molecules, which consist of the active regions on antibody drugs, are much smaller and easier to manufacture than Mabs.

Numerous US firms are working on these. Among them is Nektar Therapeutics, which made its name with PEGylation (through Neulasta) and now applies similar strategies to antibody fragments to create what might be termed “double-bio-betters-betters.”

Chemical changes need not be as drastic as altering the amino acid sequence.

Switching expression systems is enough to affect glycosylation patterns, which may affect safety and efficacy, although the magnitude of this effect is debated.

One thing is certain: Chemical changes, however subtle, will alert regulators to potential safety issues.

Higher risk, higher reward

The emergence of biobetters has taken some of the luster off biosimilars.

For example, Israeli generics firm Teva, known for its small-molecule knockoffs, has been selling its version of Amgen’s Neupogen (filgrastim) white blood cell booster in Europe since 2008.

The eponymously named product, TevaGrastim, was approved under abbreviated regulatory designations in several European countries.

US approval, which has been delayed by regulators for 18 months, is expected under a full-blown BLA, meaning TEVA had to conduct all three phases of human testing.

Although Amgen has fiercely opposed the US debut of Teva’s biosimilar, the company’s downside is limited in that Amgen has already moved on to a biobetter version of the drug.

Neupogen’s annual US sales are around $900 million, while revenue from biobetter Neulasta (pegfilgrastim), a PEGylated version of the protein, exceed $2.5 billion.

Bassil Dahiyat, CEO of Xencor, believes that the business case for biosimilars is rather bleak in developed nations, and that biobetters represent a much more exciting opportunity.

Dahiyat describes biogenerics as a “low risk, low reward strategy” while biosuperiors are “higher risk, higher reward.”

He reasons that while clinical risk for biosimilars is lower than for biosuperiors and new biological entities, it is not zero.

Add to that uncertainties around human testing, reimbursement and competition, the burden of demonstrating similarity (but not superiority), and the almost assured need to employ BLA-like sales and marketing, and biosimilars—particularly complex molecules like Mabs—lose much of their attractiveness.

“The clinical path will be somewhat shorter, but if any safety signals arise you’re toast,” says Dahiyat.

He cites the case of Medimmune’s Synagis antibody for preventing respiratory syncytial virus in children.

The company sought approval of a second-generation biobetter through a full Biologics License Application, but the FDA rejected the drug based on a non-significant rise in mild infusion reactions.

The lesson is clear for manufacturers of any follow-on biologic: Safety signals will not be tolerated.

Competing on value

By Dahiyat’s thinking biosimilars should thrive in price-conscious “pharmerging” nations where consumers pay for their own medicines, and to a lesser degree in single-payer wealthy nations, but not Stateside. (For more on emerging markets, see‘Getting into the Indian pharma market’, ‘The Middle East: A pharma market in the making’, ‘Reassessing Russia's pharma market’; ‘Breaking into the Brazilian pharma market’; ‘Cracking the Chinese pharma market’; and‘How to get ahead in 'pharmerging' markets’.)

Yet conventional wisdom holds that in the US high entry costs and lack of competitive vigor will lead to modest price erosion—perhaps 15 to 20 percent—for biosimilars compared with the innovator molecule.

Thus, biosimilars and biobetters will be compete based on value, with the former being cheaper and the latter more effective.

Bernstein Global Wealth Management’s Gal counters that biosimilars, and perhaps the entire panoply of follow-on designations, could experience price drops similar to those of generic small molecule drugs.

High gross margins for biologics, he argues, will assure competition and price erosion: “You can drop the price from $10,000 per patient per month to $1,000 and still make an eighty percent gross margin.”

As with biosimilars, biobetter developers have tested the regulatory waters with relatively low-risk molecules like cytokines and hormones, which have long and admirable safety records.

“The tumor necrosis factor market is one big ‘biobetter,’” Gal notes. These include the antibody TNF blockers Enbrel, Humira, and Remecaid.

Within this class, all of which act on the same molecular target, Gal calls the distinction between biobetters and new chemical entities “very, very blurry.”

So why are so many companies still pursuing biosimilars?

“They’re hoping to thread the needle,” Dahiyat explains.

“Perhaps they believe they can leverage other elements of their organizations, or balance that risk across a portfolio of products.”

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