Epirus, Polpharma Team To Develop, Sell Rheumatoid Arthritis Biosimilars

Epirus Biopharmaceuticals Inc., a U.S. biotech focused exclusively on biosimilars, is partnering with Polish generics titan Polpharma SA to develop and commercialize biosimilars of three anti-inflammatory blockbusters in a deal that analysts are hailing as another step in a well thought-out and executed strategy in a highly competitive sector.

In a deal announced July 14, Boston-based Epirus is teaming with privately held Polpharma on biosimilar versions of Johnson & Johnson’s Remicade (infliximab), AbbVie Inc.’s Humira (adalimumab) and Roche’s Actemra (tocilizumab), with Polpharma getting commercial rights in much of the European Union, the Middle East, Turkey, Russia and the Commonwealth of Independent States. [See Deal]

Epirus, which has launched a biosimilar of infliximab in India with partner Sun Pharmaceutical Industries Ltd. as Infimab, will retain commercialization rights to all three biosimilar products in Switzerland, Norway, Austria, Belgium, Denmark, Finland, Luxembourg, Sweden and the Netherlands, as well as North America, which is not affected by the agreement (Also see "Epirus Gets Remicade Biosimilar Nod In India, Rollout Early 2015" - Scrip, 15 Sep, 2014.). Near-term regulatory filings of the infliximab biosimilar (BOW015) are planned in Mexico, Argentina, Indonesia, Thailand, Malaysia and Korea as well, Epirus said on a same-day investor call.

U.S. and EU filings of BOW015 are planned for 2017, with the partners planning to file the adalimumab copy (BOW050) globally in 2018, followed by tocilizumab (BOW070) in 2019.

Infliximab biosimilars are already available in Europe and are hitting J&J hard (Also see "J&J’s Gorsky Stands By Remicade Longevity As Biosimilar Impact Hits Europe" - Pink Sheet, 14 Jul, 2015.).

Under the deal, Polpharma, which has been selling generics for more than 80 years with over 600 products in its portfolio currently, will pay about $30 million to cover development costs of the three biosimilar development programs.

Beyond that $30 million, Polpharma will also finance commercial launch in its territories. The companies will split additional development costs and share profits on those products in Polpharma’s territories, with the Polish firm getting 51% of the profits and Epirus 49%. A joint management board will oversee the programs, with Polpharma’s participation to be led by Hannes Teissl, formerly a 22-year executive with Sandoz Inc. who oversaw launches of biosimilar human growth hormone and erythropoietin while heading up Sandoz’s German unit.

“We are focused on maximizing profitability for Epirus and as such we strive to design and execute on collaborations that optimize value retention for the long term,” Epirus President and CEO Amit Munshi said on the call.

“We believe this type of deal structure best positions our company and our shareholders to benefit from greater earnings over the long term. For Epirus, it has always been about finding the right deal structure and the right partner; given their expertise, focus on this space and strong commercial infrastructure, Polpharma for us was a natural fit.”

In a same-day note, analyst Hartaj Singh of BTIG Equity Research said he “remains bullish” on Epirus after this deal, because he believe success in the biosimilars space will require execution on a well-planned strategy.

Polpharma employs a commercial team of more than 1,700 personnel and has previous experience commercializing rheumatoid arthritis drugs – and it can rely on several former Sandoz employees with experience in biosimilar development. Singh called Polpharma an ideal partner for Epirus due to its “understanding of the technical aspects of biosimilar development and ability to be an efficient and serious competitor.”

“Epirus could have signed an economically dilutive deal, i.e. out-licensing the product to Polpharma and then collecting royalty checks, but this would be a ‘jam now, egg on-face later’ strategy that many biotech companies have demonstrated; with out-licensed products having gone on to be blockbusters and the originator collecting pennies on the dollar for its efforts,” he said.

Reference Products Yielded $23 Billion In Sales

The three drugs targeted under the biosimilar alliance accounted for global revenue of roughly $23 billion in 2014, Epirus reported, including about $6 billion in the territories now controlled by Polpharma. Under the deal, the U.S. biotech will be responsible for process development, scale-up and manufacture of commercial product.

During the call, Munshi addressed some of the challenges for commercializing biosimilar products successfully in some of the markets Polpharma will manage under the agreement. For example, Turkey presents a highly fragmented, retail market, while Germany uses both hospital and retail channels and sets a biosimilars quota reimbursement rate.

“We’ve already jointly begun to evaluate market dynamics and develop best commercial strategies to penetrate markets within these territories,” the exec said. “In order to get a competitive footprint, it’s become increasingly important to understand the relative complexities and the nuances for each of the markets we will be going into. We will work closely with the Polpharma team to develop commercial plans and leverage their expanding sales and marketing infrastructure.”

Epirus eventually plans to establish its own direct commercial footprint in the European markets it retains after the deal with Polpharma, Munshi said.

The two companies are now working together to advance the clinical programs for all three biosimilar products, and that those programs remain on schedule. There is a 50-month process for each product, with about 18 months required for comparability assessment, six months for preclinical development and 18 months for clinical development, followed by the approval and launch processes.

WedBush equity research analyst Heather Behanna also lauded the deal, rating Epirus’ shares “outperform” in a July 14 note and saying the collaboration with Polpharma sets up the Boston company for success.

“We anticipate Epirus will become cash-flow positive in 2019,” she said. “We note that Epirus is retaining [the] Benelux countries to commercialize by itself – about 13% of the EU market; in our view, these territories can bring meaningful revenue to Epirus, as many of these territories allow for flexibility on price and have a history of biosimilar use.”

Epirus went public in April 2014 through a reverse merger with Zalicus Inc.[See Deal]. It netted $44.6 million from a follow-on public offering this past January [See Deal].