Please ensure Javascript is enabled for purposes of website accessibility

Coherus Biosciences and Baxalta Take Aim at Amgen and Pfizer

By Todd Campbell - Jan 12, 2016 at 3:01PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A new biosimilar generic alternative to the multibillion blockbuster Enbrel could hit pharmacy shelves next year.

Image source: Amgen.

Amgen (AMGN -0.17%) and Pfizer (PFE -0.28%) haul in billions of dollars annually in sales from their autoimmune disease drug Enbrel, but Coherus Biosciences (CHRS 0.59%) and Baxalta (NYSE: BXLT) just reported trial data that indicate their generic alternative to Enbrel could be available soon.

A bit of background
Amgen and Pfizer's Enbrel is approved to treat common autoimmune disorders including rheumatoid arthritis and psoriasis that aren't effectively controlled by methotrexate, a first-line therapy for those indications.

Demand for Enbrel has been so significant that the drug, which has been on the market in the U.S. since 1998, is still generating billions of dollars in sales every year.

In the third quarter, for example, Amgen reports that Enbrel revenue totaled $1.5 billion (mostly in the U.S.) and overseas, where Pfizer markets Enbrel in Europe, sales were $844 million in Q3.

Enbrel's multibillion-dollar annualized sales run rate has put it in the crosshairs of companies like Coherus Biosciences and Baxalta, which are working in partnership to develop CHS-0214, a drug that isn't an exact copy of Enbrel, but works similarly enough to it to warrant approval as a biosimilar.

Historically, because biologics like Enbrel, which are crafted inside living organisms, are impossible to precisely replicate, biologic drugmakers have been mostly immune to generic competition. That's begun to change however, thanks to post-healthcare reform guidance that allows for biosimilar approval in the United States.

Solid data
In November, Coherus Biosciences and Baxalta reported that the first of two phase 3 trials of CHS-0214 met its primary endpoint in plaque psoriasis patients.

Specifically, patients with moderate to severe plaque psoriasis who took CHS-0214 saw a similar improvement in their Proriasis Severity Index Scores compared to people who take Enbrel. Plus, there were no meaningful differences in safety between the two drugs either.

That trial appears to clear the way for doctors to be able to prescribe CHS-0214 instead of Enbrel in millions of patients worldwide. According to the International Psoriasis Council, about 3% of the population has psoriasis globally.

This week, the two companies appear to have successfully expanded the potential market for CHS-0214 to include rheumatoid arthritis patients, too.

Results from a second phase 3 trial show that patients with moderate to severe rheumatoid arthritis who took CHS-0214 saw their condition improve similarly to people taking Enbrel, based on criteria from the American College of Rheumatology. Overall, up to 1% of the global population has rheumatoid arthritis, including 1.3 million people in the United States.

Next step
The two trials of CHS-0214 are still ongoing, but the positive results that have been reported indicate that Coherus Biosciences and Baxalta will be preparing applications for approval in various markets by the end of this year.

Initially, applications for approval will have the best shot at getting a green light outside the United States because patents on Enbrel in key markets, including Europe, have already expired. In the U.S. however, patents protecting Enbrel until 2028 were surprisingly issued in 2011. So far, efforts to invalidate the patent extension have fallen short, but Novartis still filed for FDA approval of its own Enbrel biosimilar this past October.

If CHS-0214 and other Enbrel biosimilars are eventually approved, it could spark a price war. Until now, biosimilars launched in overseas markets have been priced at about a 30% discount to the brand name biologic's price. However, discounts could be bigger if multiple drugs vie against one another. For example, small-molecule generic drug prices can be 80% lower than the brand-name price when there are multiple competitors.

Because of that pressure, it's hard to guess just how much money CHS-0214 could bring in for Coherus Biosciences and Baxalta, but the trial data suggests that the drug could reach the market in 2017. If it does, so, then it's most likely that Pfizer's European market share will be the first to take a hit.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$49.13 (-0.28%) $0.14
Amgen Inc. Stock Quote
Amgen Inc.
AMGN
$245.84 (-0.17%) $0.41
Coherus BioSciences, Inc. Stock Quote
Coherus BioSciences, Inc.
CHRS
$11.90 (0.59%) $0.07
Novartis AG Stock Quote
Novartis AG
NVS
$85.98 (0.48%) $0.41

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.