As the patents for a range of important biological therapeutics approach expiry, the market for their generic equivalents, biosimilars, looks set to grow, offering greater access to key medicines at lower prices. In practice, however, pharmaceutical and biotechnology investors are wary of biosimilar projects due to the expense of development, a competitive marketplace, and high manufacturing costs that expose profit margins to drops in price.
Fortunately, fresh strategic thinking driven by innovative technology allows biosimilars to overcome the regulatory obstacles and defensive tactics of incumbents that are a feature of the US marketplace in particular.
The thwarted promise of biosimilars
On the face of it, biosimilars offer their owners substantial rewards for lower risk when compared to originator therapeutics that are seeking regulatory approval for the first time. Governments and patients benefit from greater access to key medicines at lower prices, which are often the best available treatments for a range of disorders. Yet the US system of pharmaceutical agents, buyers and rebates has not been welcoming to biosimilars in the past. The owners of the original reference molecule protect their market from new entrants using tactics that include aggressive price cutting and campaigns aimed at discrediting the efficacy of biosimilars.
Costly CDMO solutions are vulnerable to competition
One standard approach to manufacturing a biosimilar is to hire a contract development and manufacturing organisation (CDMO) who can design cell lines using Chinese Hamster Ovaries (CHO). Monoclonal antibodies represent the majority of biological therapeutics and tend to be made in CHO cells. However, the technology is widely available, allowing market competition from other biosimilars that have passed the regulatory process, as well as the originator reference product. This puts downward pressure on obtainable market share and price, deterring investors who might otherwise be tempted by the potential of the US market, which is the biggest in the world.
Manufacturing with CHO also has a high cost with limited scope for reductions. The batches for bioequivalence along with Phase 1, Phase 2 and potentially Phase 3 clinical testing as demanded by regulators can create up-front costs amounting to more than $100m. As part of a project’s ‘net present value’ evaluation, the returns can therefore look meagre when set against the risks being taken.
Alternatives to CHO encounter knowledge barriers
Several regulated biological therapeutics that are not monoclonal antibodies can be made using more affordable microbial systems, such as yeast or E. coli. However, the strains to manufacture the original biological therapeutics are often proprietary and their development tends to have involved substantial know-how and investment. This technical detail is usually closely guarded, forming a knowledge barrier to aspiring biosimilar developers and extending the originator company’s monopoly well beyond the patent expiry period.
QTL technology is transformative
Fortunately, QTL technology is set to break down barriers by enabling multi-parameter bespoke optimisation of production strains for individual biosimilars that exactly match the reference molecules, often with greater consistency and tighter process control. They can be produced by robust manufacturing processes designed to maximise economic competitiveness. In addition, genome optimisation of the production host for each biosimilar can generate valuable intellectual property to enable patent protection of the improved production strain.
At present monoclonal antibodies are almost exclusively made in mammalian cells, which are mainly CHO cell lines. One reason for this is that the N-linked glycosylation from CHO can be sufficiently human-like for an acceptable safety profile. However, research into QTL technology in Saccharomyces cerevisiae (baker’s yeast) promises to combine proven engineering for humanising N-linked glycosylation with genome engineering for robust and efficient biopharmaceutical manufacturing, to significantly improve the manufacture of monoclonal antibodies and other glycoproteins from this microbial host.
With QTL, up-front costs are lower
The batches for the bioequivalence regulatory process for a monoclonal antibody using CHO can cost around $100 million, with a Phase 3 trial typically costing another $50 million. The batches for a biosimilar manufactured using a yeast strain optimised by QTL technology would be significantly less. Phase 3 trials for regulatory approval in the UK aren’t always required if the appropriate biosimilar is chosen along with a submission that demonstrates bioequivalence, efficacy and safety. This is initially possible using QTL-optimised baker’s yeast for biosimilars without N-linked glycosylation. Going forwards, it will be extended to glycoproteins, such as monoclonal antibodies, following yeast genome engineering for humanised glycosylation.
A new strategy to excite investors
QTL technology driven by fresh strategic thinking can make biosimilars a more compelling investment opportunity. The companies that develop and market biosimilars using the following steps are more likely to enjoy long-lasting returns without the effects of a patent cliff.
- Select initial biosimilar projects based on biological therapeutics that are not monoclonal antibodies or do not necessitate manufacture using CHO.
- Select biosimilars where the regulatory pathway is foreseeable, tractable and affordable.
- Target initial territories where the regulatory regime is amenable to biosimilar entry, notably the MHRA in the UK.
- Having achieved regulatory approval and market entry in a regulatory-friendly country, leverage the increased legitimacy of the biosimilar to expand.
- Track emerging technologies that can manufacture monoclonal antibodies to the requisite quality for bioequivalence at a lower price.
