On the heels of launching its generic biosimilar to Amgen (NASDAQ:AMGN) top-selling anemia drug Neupogen last month, Novartis (NYSE:NVS) has filed another biosimilar application for Food and Drug Administration approval. This time, Novartis is angling to steal away market share from Amgen's multibillion-dollar blockbuster Enbrel, a therapy widely used to treat rheumatoid arthritis and psoriasis.
The beginning of a new era
Previously, top-selling biologics haven't had to face off against generic counterparts because of their complexity and expense. Biologics are created in living cells, making it virtually impossible to create exact replicas, and despite European regulators embracing generic alternatives for years that aren't identical but that work similarly to the brand-name drug, U.S. regulators have taken a more cautious approach to them.
That's changing in the wake of the Affordable Care Act, which included provisions leading to the FDA's establishing a clear pathway for biosimilars to eventually reach American patients.
Last month, Novartis' Sandoz division, which is one of the globe's largest generic drugmakers, launched the first biosimilar available in the U.S.
That drug, Zarxio, will compete against Amgen's blood cell-boosting drug Neupogen, which first won FDA approval way back in 1998. Although Neupogen has been on the market for more than 15 years, its original formulation still brings in more than $1 billion in sales for Amgen.
Novartis has priced Zarxio at $438.98 for a 480 mcg/0.8 mL dose -- a 15% discount to the price Amgen gets for its Neupogen.
Because biosimilars prices in Europe are roughly 30% lower than the reference drug they compete against, the savings to patients and payers, including Medicare, could prove to be significant as the U.S. biosimilar market matures and more products win FDA approval.
Next up: Enbrel
Now that Novartis is winning away scripts from Neupogen, it has set its sights firmly on winning regulatory support for its next biosimilar, a look-alike to Enbrel that Novartis' claims delivers similar efficacy and safety.
Like Neupogen, Enbrel first won FDA approval in 1998. Enbrel is approved as a treatment for rheumatoid arthritis patients whose condition isn't adequately controlled by DMARDs, a class of drugs widely used as first-line treatment in these patients. Over the years, Enbrel's label has grown to include its use in treating a variety of autoimmune diseases, including moderate to severe plaque psoriasis.
Enbrel belongs to a class of drugs known as anti-TNFs, which reduce the production of a protein in the immune system that is responsible for inflammation. By reducing inflammation, anti-TNFs are able to reduce the symptoms associated with these autoimmune diseases, and as a result, this class of drugs is among the best-selling medications in the world.
Last quarter, Amgen reports that Enbrel sales grew 8% year over year to $1.35 billion. Therefore, if Novartis secures FDA approval for its Enbrel biosimilar and prices it at a similar discount to Enbrel as Zarxio is priced to Neupogen, then Novartis could end up with a billion-dollar drug on its hands.
Novartis' Sandoz has five biosimilars in phase 3 studies -- the final stage of evaluation prior to filing for approval -- and each of those five drug candidates has similar billion-dollar potential. Among those closest to a regulatory filing are its biosimilar to Amgen's Neulasta, a long-lasting formulation of Neupogen that posted sales of $1.1 billion in Q2, and a biosimilar to Amgen's Epogen, which racked up $491 million in sales last quarter. Novartis is currently doing the prep work necessary to file those drugs with the FDA, so more news should be coming out on them soon.
Although there's no telling when the FDA will make a decision on Novartis' Enbrel biosimilar, it probably won't take too long. Novartis' application for Zarxio was accepted in July 2014 and it got its green light in March, a bit less than eight months later. That suggests that the FDA could issue a go/no-go decision for the Enbrel biosimilar around June 2016.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.