Coherus looks to disrupt Amgen’s $4B Neulasta franchise as analysts look for a deep discount on its copycat price
Despite being the runner-up in the race to a US approval for a biosimilar of Neulasta, analysts are watching to see if little Coherus could gain quick traction if they sell theirs at a big discount to Mylan’s rival.
On Friday, Coherus said it had secured the FDA’s nod for a copycat version of Amgen’s blockbuster product — coming second to Mylan $MYL and Indian partner Biocon in the race to market a biosimilar for Neulasta in the more lucrative US market. Coherus’ biosimilar, Udencya, was granted European approval in September.
Neulasta, which is used to thwart infections in cancer patients, accounted for nearly a fifth of Amgen’s net product sales in the third quarter, bringing in about $1.05 billion but this approval has added more pressure to the drug’s already weakening revenue outlook. Meanwhile, Novartis $NVS is also planning to resubmit an application to market its once-rejected Neulasta biosimlar next year.
Outside of the US, Neulasta only represents a roughly $500 million opportunity, which mean the core focus is on the significantly more lucrative $4 billion US market and even modest penetration with this asset alone could meaningfully stem Coherus’ cash burn — and/or potentially lead to profitability, said Cowen analyst Ken Cacciatore in a note. “Even at a 40%+ price discount, only 10% of the market would allow Coherus…to turn cash-flow breakeven while still supporting a robust development pipeline.”
The FDA approval for Coherus’ Udencya comes later than expected as the regulator declined to approve the drug last June, asking the company to conduct a re-analysis of existing data with a more sensitive assay. Details on the drug’s commercialization plan will be provided on the company’s Nov. 8 quarterly earnings call, the Redwood City, California-based company said in a statement.
“The list price of Neulasta has nearly tripled since approval in 2002 and now represents a $4 billion annual cost burden in the U.S…and Udenyca will play an important role in curbing that spend when launched,” said Coherus chief Denny Lanfear.
In Coherus’ second quarter conference call in August, senior VP of marketing Jim Hassard noted that the list price of Neulasta is about $6200 per pre-filled syringe, and its average selling price — as published by CMS — is about $4200. Mylan came to the market with a price that is about 6% lower than the average selling price, he said, and analysts concurred that Mylan’s launch had thus been fairly anemic due to its modest discount.
Overall, Coherus management has indicated Udencya could be in a position to capture roughly 10-20% of the current US market following the first full year of launch, noted Cowen’s Cacciatore. “Although there still remains some controversy about potential penetration rates and pricing/contracting strategies, we believe this is a reasonable expectation. We continue to find it difficult to believe that if the supply is consistent, and if there is a perception that the quality of the product is high, that there will not be meaningful share that would be willing to move to a significantly discounted product (40% +).”
Although Coherus’ pricing strategy is unclear, they have been in active discussion with payers and other stakeholders, and appear to have more than enough supply in place in tandem with a manufacturing capacity that is powered to support a market share of 28%, Leerink’s Geoffrey Porges wrote in a note, adding that another perceived advantage Coherus has is that all its products are manufactured in the US, unlike Mylan’s Neulasta copycat Fulphila that is made by Biocon in India.
“Coherus also learned the lesson from Amgen to provide billing and co-pay assistance to physicians and patients, respectively, and is aiming to match the ‘white glove’ service Amgen provides…they could contribute to greater-than-expected early share gains for Coherus, should they match Amgen’s sales support,” he said.
Amgen last year sued Coherus, accusing the company of a massive conspiracy by poaching its employees and spurring them to use their trade secrets to stimulate the development of Coherus’ slate of biosimilars. Lanfear previously served as Amgen’s VP of market development, while Coherus’ chief scientific officer and chief technical officer have also both worked at Amgen. Coherus denied the charges.
Coherus’ shares were up about 5.7% in premarket trading on Monday.