Addressing Biosimilars: Federal Legislation for a Pathway

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Addressing Biosimilars Federal Legislation for a
Pathway

• May 28, 2009
• Kerry A. Flynn
• Shire Human Genetic Therapies, Inc.

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Shire Human Genetic Therapies, Inc.

• Specialty pharmaceutical company with a range of
  products on the market for Attention Deficit and
  Hyperactivity Disorder (ADHD), gastrointestinal
  (GI) and therapies for human genetic diseases
• Shire Human Genetic Therapies business unit
  pursues treatments for patients and families
  facing such rare (Orphan or Ultra-Orphan)
  diseases as Fabry disease, Hunter syndrome,
  Gaucher disease, hereditary angioedema, and
  metachromatic leukodystrophy

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Hot topics

• Data Exclusivity
• Regulatory Pathway
• Patent Issues

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Data Exclusivity Periods Considerations

• Biosimilar may be similar enough to a pioneer
  biologic for regulatory approval purposes, but
  different enough to avoid the innovator's patents
• New therapies will never be developed for some
  addressable diseases
• The current orphan incentives mean that the
  development of a therapy for some diseases will
  never yield a return
• Lower commercial returns for similar development
  costs
• Prospective commercial returns for orphan
  biologics are much lower than for other biologic
  drugs due to the significantly smaller
  addressable patient populations. Any future
  pricing pressure will reduce incentives further
• Magnifies risk of failure (lower portfolio
  profits to cover failed products)

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Data Exclusivity Considerations (Contd)

• Large orphan markets have already been addressed
• Many of the larger orphan markets already have
  approved and effective therapies (low hanging
  fruit has gone)
• Greater commercial risks in remaining markets
• Remaining markets include diseases with high
  morbidity where there is little ability to
  understand a drugs impact on life expectancy (a
  key driver of commercial return) prior to pivotal
  trials (ie. after much of the investment has been
  made)
• In order to preserve innovation for orphan drugs
  in the future (and in an environment of tighter
  pricing), exclusivity periods need to be longer
  (than for non-orphans) to compensate innovators
  for increased development and commercial risks in
  these challenging markets

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Theoretical market model analysis

• Theoretical product development /
  commercialisation model
• Range determined for key variables
• Peak sales - 100m-500m
• COGS 12-15 (implicitly captures facility
  investment)
• SM sales 10-20
• Total development costs over 9-year period -
  150m - 300m
• CMR biotech PoS benchmarks
• Other assumptions kept fixed
• Discount rate 11.5
• Tax rate 30
• Working capital 20 of y.o.y change in sales
• Ranges of key variables were simulated using
  uniform distribution assumption
• Assumes that each value in the range is equally
  likely
• Simulated eNPV after defined periods of
  exclusivity assuming terminal perpetuity decline
  rate of 50 post exclusivity expiry
• Analysed of outcomes where eNPVs were positive
  for different exclusivity assumptions

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60 of hypothesized outcomes never make a return
with 7 years of exclusivity
Peak sales range 100m - 500m

• Peak sales range (100m-500m)
• Reflects market size for vast majority of small
  orphan diseases
• Excludes large orphan markets (gt500m)
• 60 of outcomes never generate a return assuming
  a 7 year exclusivity period
• 35 of outcomes never generate a return assuming
  a 12 year exclusivity period

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Duration of Patent and Regulatory Exclusivity
Peak sales range (m)
2013
ELAPRASE (500-600)
2019
2011
REPLAGAL EU (300-350)
2020
FIRAZYR EU (350-400)
2018
2009
2000
2005
2010
2015
2020
2025
Patent Term
Regulatory Exclusivity
Orphan Drug Regulatory Exclusivity in EU
until 2017 Assuming US approval
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Regulatory Pathways Considerations

• clinical trial evidence and data are fundamental
  for evaluating and demonstrating the safety and
  effectiveness of a follow-on biologic, and must
  be conducted on a product-by-product basis
• Avoid constraints on the scientific conclusions
  FDA can reach in evaluating the similarity or
  comparability of follow-on biologics
• Trade secret and confidential commercial data and
  information of an innovator must be protected

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Patent Considerations

• Must not limit constitutional or statutory rights
  of patent holders to protect against infringement
  
• Patent challenge involving the follow-on biologic
  product must be litigated prior to marketing
  approval of the follow-on product
• No special patent litigation rules that favor
  follow-on biologics manufacturers
• Interplay between Orphan drug legislation (Same
  product), Biosimilar legislation (similar
  product) and Patent legislation (literal
  infringement/doctrine of equivalents)

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Patent considerations

• Biotechnology processes define product
• Yeast fermentation
• Budweiser
• Amstel
• Heineken
• Molson
• Are these products equivalent? Similar?

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• Hormone Res. Foundation v. Genentech, 904 F. 2d
  1558 (Fed. Cir. 1990)
• Patent
• Accused hGH product differed by two amino acids
  from claimed product
• CAFC held no literal infringement
• Regulatory
• Would product be similar enough to be approved as
  a Biosimilar?
• Orphan
• Is it the same drug? rhGH found to be
  different drug than pituitary derived hGH

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• Amgen v. Hoechst Marion Roussel (EPO cases)
• Patent
• Patent claimed 166 aa mature sequence
• Accused product had 165
• No literal infringement
• Infringement under doctrine of equivalents
• Regulatory
• Products similar?

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Conclusion

• Legislation must
• Provide adequate incentives for development of
  orphan biologics
• Not abrogate the rights of patent holders
• Rely on scientific evidence