Biosimilar Maker Adello Biologics Bought by Pharma Research Company

The assets of biosimilar drug developer Adello Biologics were sold to Kashiv Pharma, LLC, the companies announced on January 4, 2019. The new company will now be known as Kashiv Biosciences, with its headquarters in Bridgewater, New Jersey.

Adello Biologics

Adello Biologics had been one of a handful of “pure-play” biosimilar companies, in that it was not involved with any other pharmaceutical sectors. Its two biosimilar products in most advanced development (filgrastim and pegfilgrastim) would be subject to heavy competition if approved. The acquisition by Kashiv now broadens the pipeline. In a press release, Kashiv cited “As a result of the acquisition, Kashiv BioSciences’ broad business offering includes drug delivery platforms incorporating delayed-release technology and gastric retention systems that improve the efficacy and safety of known drugs; a 505(b)(2) pipeline of seven development products targeting unmet clinical needs.” It does not appear that any of the 505(b)(2) agents are currently being evaluated for approval by the FDA.

A privately held company, it had been known as Therapeutic Proteins International since November 2016. Adello filed for Food and Drug Administration (FDA) approval for its filgrastim biosimilar in September 2017, with a decision expected in the third quarter of 2018. The delay in approval lends speculation to the possibility that FDA issued a complete response letter to the company. This filing was based on the submission of phase 1 data only. In March 2018, Amgen filed a lawsuit against Adello in New Jersey District Court, claiming patent violations and that Adello failed to follow the necessary biosimilar development protocol outlined by law.

The company’s pegfilgrastim biosimilar (TPI-120) had completed two phase 1 studies by the beginning of 2018, and it was hoped that the company would submit its FDA 351(k) application before the end of the year. Executive Vice President & Chief Business Officer Pavan Handa confirmed in an E-mail that the pegfilgrastim program “is in active development and we continue to make significant progress towards a filing. ”

Adello’s journey highlights the potential financial problems that biosimilar-focused companies may face. As a privately owned company, its capitalization was likely limited, and delays in reaching the market become even more critical for companies without other revenue-generating products. The deal with Kashiv breathes new life into the enterprise, but Kashiv, too, does not yet have an approved biosimilar product (nor approved innovative drugs) to its credit. Before the acquisition, Kashiv had focused on “applying novel technologies to improve the delivery of compounds with otherwise problematic physical and/or chemical properties” and on abuse-deterrent technologies for opioid products.

It appears to us that the purchase of Adello by Kashiv, another private company, is an effort at doubling down, to attain more immediate revenue from drug sales.

Let’s not Knock Innovation, but Biosimilars Exist for the Sake of Competition

A recent Twitter conversation between a blogging colleague of mine and a German advocate of precision medicine propelled this post: What is the real benefit of biosimilars? Does biosimilar development detract from efforts to produce innovative medicines? Is the main societal benefit biosimilar cost savings?

biosimilar cost savings

Biosimilar Development Is Separate From Innovation Development

The main reason that the Biologics and Biosimilars Price Competition and Innovation Act (BPCIA) was signed into legislation was related to cost containment. For biologics, there was no pathway for the evaluation and approval for lower-cost copies in the US health system, akin to the generic-brand name dynamic for conventional drugs. Adding competition has been the first and only point. The specialty drug trend had been rising rapidly, and the long-term estimates were frightening: Costs associated with specialty drugs like biologics threaten to eat 48% of the total drug spending pie in the United States by 2020.

Two factors were responsible. The first, increasing specialty drug utilization, has been especially difficult to address. The pipeline is congested with biologics. Medical societies are increasingly incorporating biologics into their guidelines and clinical pathways. Prescribers have grown more comfortable with these agents, and payers have limited tools at their disposal to put the brakes on their use.

The second, price increases, are well known and publicized. Without competition, drug companies tend to test what the market will bear, and to this point, they have borne quite a bit. Unlike in Europe, where the tender system of pharmaceutical purchasing has resulted in better cost containment, the US payers have been accustomed to stomaching large price increases through increased use of rebate contracts with price guarantees. But the overall costs continue to rise, as contracts expire and new ones are drawn up. Thus, the list prices for drugs like Enbrel® and Humira® have skyrocketed, with Humira’s more than doubling in a few years.

There is no evidence to say that biosimilar manufacturers would have engaged in the development of innovative new agents had they not devoted resources to this area. Indeed, pure-play biosimilar makers, like Coherus or Adello, were only introduced to produce biosimilars. Other makers, such as Samsung Bioepis, are joint ventures of existing manufacturers to do the same. Biogen recently raised its stake in Samsung Bioepis to nearly 50% of the company’s shares. This could be construed as a case of an originator company pouring $700 million into a biosimilar manufacturer, which could be using that money directly for other purposes. Finally, firms like Apotex, Mylan, Sandoz, and Hospira (now part of Pfizer) are heavily involved in generic drug manufacturing. Biosimilar development was a natural extension for them. Even big pharma players, such as Amgen, Merck, and Pfizer, are more commonly engaged in biosimilar marketing partnerships rather than purely R&D efforts (e.g., Amgen/Allergan, Merck/Samsung Bioepis, Pfizer/Celltrion).

One can also make an argument that pharmaceutical innovation is more evident at the drug discovery level. These days, big pharma seems less interested in pursuing drug discovery than in purchasing it.

The Societal Benefits of Biosimilars

The EMA and FDA biosimilar pathways were created to introduce competition that would lower drug costs. This in turn would make innovative biologic therapy available to more patients. Biosimilar cost savings could drive greater access to important drug technologies.

With the EU’s longer and more extensive experience with biosimilar medications, costs have indeed been saved. Although this has varied by country, it is undeniable.

In the US, with very limited economic experience with biosimilars (filgrastim and infliximab), savings figures are more theoretical than real. Although the infusion of a biosimilar into the new market may reduce wholesale acquisition price of the reference drug a bit, it will have a greater effect on net pricing, after rebates. And, of more immediate importance, the new biosimilar has the potential to halt further price increases for the originator product. This aspect of biosimilars cost savings cannot be overemphasized. Between the first adalimumab biosimilar approval and the initial availability of these products in 2023, the list price of Humira can increase upwards of 40% (or more, if Abbvie veers from its pledge to limit price increases). The initial price of the first adalimumab biosimilar will thus be much higher than if it was launched last year. On the other hand, adalimumab biosimilars will launch in the EU in October of this year, which should effectively lower cost products and limit their EU members’ exposure to future Humira price increases.

Biosimilar cost savings can have real benefits in terms of improved access. Payers’ incentives to use biosimilars (if they are motivated to implement them) can result in lower patient cost sharing. For example, a fourth-tier biologic may be subject to a 20% cost share, whereas a third-tier biosimilar may carry a flat copay of $100. This can make a difference in terms of therapeutic choices available to patients.

In conclusion, the German correspondent is only partly right. Biosimilars are not innovative. They are highly complex, cost-control medications. Do they detract the focus of manufacturers from new innovative products? There’s no evidence of this. However, we are beginning to see limited evidence in the US of the societal benefits, namely cost savings, they can bring.