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Series A-4: Are companies building drugs for the Chinese market or the western/US market?

Mostly Chinese.

 

According to IMS, China’s spending in medicine has been growing fast, reaching $137 billion in 2018[1].

 

 

Another research database shows that in 2018, China’ exports in medicine was $17.4 billion[2] and imports was $29.6 billion[3].

 

Although they might use different sources/measures, we could roughly estimate that in 2018, non-import medicine consumption was 137-29.6 = 107.4 billion and domestic medicine production was 107.4+17.4 = 124.8 billion.

 

Therefore, 86% of Chinese drug companies’ production was for the domestic market while 14% was for exports in 2018.

 

For the more modern (or newly funded) innovative biotech/drug companies in China, they are targeting the global markets. Usually they will divide the commercial rights by regions and retain the greater china rights while sell the rest (another source of funding). Some innovative drug candidates’ global rights ex china have already been licensed/acquired by western/US pharmaceutical companies. Most Chinese biotech companies don’t have the capability to develop/commercialize outside the greater china area.

[1] https://www.iqvia.com/institute/reports/the-global-use-of-medicine-in-2019-and-outlook-to-2023

[2] http://s.askci.com/news/maoyi/20190624/1150071148256.shtml

[3] http://s.askci.com/news/maoyi/20190625/1430421148825.shtml

Series A-3: What is the IP regime in China and how does it affect innovation?

According to a 2017 research “Evaluation of China’s intellectual property regime for innovation: Summary Report”[1]:

1) China’s IP laws and regulations have improved significantly over the years, and currently are generally in line with international standards.

2) Despite the surge in the quantity of patents in China in recent years, patent quality has not risen proportionately. Proliferation of low-quality patents can restrain China’s ability to

transition towards an innovation-based economy.

3) Based upon our quantitative and qualitative research, we find that, generally speaking, the courts in China handling IP disputes are more efficient and effective today than in the past. Despite these positive developments in IP enforcement in China, the effectiveness of judicial IP enforcement remains undermined by the low damages traditionally awarded in IP cases

 

In terms of IP regime for the pharmaceutical industry in China, several improvements have been made recently:

  • Patent Term Extension

Generally, the patent term in China is 20 years, similar to that in the US. But China didn’t provide other protections such as Patent Term Extension for drugs.

For drugs, which require years of premarket development and marketing approval before they can be commercialized, additional protections are usually available. In the US, a pharmaceutical patent may be extended by up to 5 years to compensate for any clinical trials and FDA regulatory time. However, the amount of time that a manufacturer has both patent and regulatory exclusivity cannot exceed 14 years. A study for 170 top-selling drugs that had a generic approved from 2000 to 2012 shows that nearly half (49%) of those drugs received a patent term extension, with a median extension of 2.75 years resulting in a total exclusivity period of 13.75 years[2],[3].

The State Council in China announced its intention to extend patent protection (and other improvements) in October 2017 《关于深化审评审批制度改革鼓励药品医疗器械创新的意见》.[4]

On April 12 2018, the State Council meeting said that 5-year patent term extension will be available for innovative drugs which apply for commercialization on domestic and oversea markets simultaneously[5].

In December 2018, the patent term extension was part of the fourth amendment (draft) of China’s IP Law[6].

 

  • Data exclusivity

Also an important protection for drug innovation, data exclusivity is newly structured in April 2018, following the October 2017 opinion[7].

The protection (6 years) was in place before, but can be applied only in limited circumstances[8].

Innovative drugs that are approved to enter the domestic market will be entitled to enjoy a data protection period of six years, doubled to 12 years for innovative biological products for curative uses, which is comparable to that of the United States and exceeds the ten-year protection period in the European Union

The exclusivity protection may be reduced or revoked under any of the following circumstances[9].:

  1. when a drug application uses data from an international multi-center clinical trial in China and the drug application filed in China is later than those outside of China, the exclusivity period is one to five years, depending on the delay, and if the delay is more than six years, there is no data exclusivity;
  2. if the drug application uses data from clinical trials conducted outside of China without involving any Chinese patients, the data exclusivity period is 25% of the foregoing;
  3. if the drug application is supplemented with clinical trial data in China, the data exclusivity period is 50% of the foregoing; and
  4. if a company fails to launch an approved drug into the market within one year of obtaining regulatory approval, the data exclusivity will be revoked.

Generally speaking, the recent reforms are pretty much playing a “catch-up” with the drug protection/exclusivity in the US. They serve both as a way to protect multinational drug companies and a way to promote domestic innovation. China’s own pharmaceutical industry has long been seen as a market filled with generic drug makers. But it is expected that more innovative drugs/therapies will be developed in China.

 

Another thing worth noting – China joined ICH in 2017. The ICH Assembly approved the CFDA as a new Regulatory Member in June 2017[10],[11]. China’s signing of the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use now exposes Chinese companies to litigation if registered patents are not honored19. This will make Chinese drug makers operating higher standard stand out and raise the play field for all the companies.

[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3118079

[2] https://www.uspharmacist.com/article/patent-and-regulatory-exclusivities-the-two-keys-driving-generic-and-followon-market-availability

[3] https://www.raps.org/news-and-articles/news-articles/2019/2/study-patent-term-restoration-extends-drug-patent

[4] http://www.gov.cn/zhengce/2017-10/08/content_5230105.htm

[5] http://www.gov.cn/guowuyuan/gwycwhy/20180412c06/index.htm

[6] http://www.phirda.com/artilce_19014.html?cId=1

[7] https://www.yigoonet.com/article/22344782.html

[8] https://www.hankunlaw.com/downloadfile/newsAndInsights/a180eb45f6f6f4a7c3530da2cdd6b463.pdf

[9] http://www.zhonglun.com/Content/2019/04-16/1353562780.html

[10] https://www.fda.gov/media/108538/download

[11] http://www.xinhuanet.com/health/2017-06/19/c_1121171609.htm

Series A-2: What diseases are they working on?

UBS summarized in its China’s biotech report – “Oncology: A driving force for innovation in Chinese biotech”.

An article by Pharmacodia in 2017 said the top 3 therapeutic areas for biologics in China are cancer, rheumatoid arthritis (RA), hepatitis B virus (HBV)[1].

Another bluebook in 2017 outlined the five focus areas for China’s biotechnologies[2]: 1) vaccines, 2) mAb and protein drugs for cancer, cardiovascular, neurodegenerative, diabetes, autoimmune diseases, 3) diagnostics and screening for major diseases, 4) gene therapies, cell therapies, 5) regenerative medicine

China suffers from an unusually high incidence of cancer, which has been the country’s leading cause of death since 2010. Nearly all companies (five out of six) went onto HKSE in 2018 are investing in oncology (except for Hua Medicine focusing on diabetes).

Among all the cancers, lung cancer is the most targeted disease due to the high incidence rate in China.

Globally, oncology is also the No.1 focus for the overall industry, accounting for more than 1/3 of the total pipeline, according to a 2018 report[3].

To develop cancer treatments, biotech companies usually focus on developments in mAbs (monoclonal antibodies), immuno-oncology, CAR-T therapies, etc.

Other breakthrough researches & developments including Qinghaosu (or Artemisinin), discovered by the team led by Youyou Tu to fight malaria.

[1] http://classic.hsmap.com/news_info/4080.html

[2] https://hsmap.com/static/bluebook.pdf

[3] https://pharmaintelligence.informa.com/resources/product-content/sitecore/shell//~/media/informa-shop-window/pharma/files/pdfs/pharma-rd-annual-review-webinar-2018-slides.pdf

Series A-1: How biotech companies in China are funded?

 

  1. VC/PE funding

 

VC/PE funds targeting China life science investments are growing fast in recent years. According to ChinaBio, in 2018 those VC/PE funds raised around $43 billion in total and invested  around $17 billion in China life science companies, up 36% from 2017[1],.

 

The amount raised by VC/PE funds quickly ramped up during the past several years, with $10.9 billion in 2015, $20.2 billion in 2016, $39.8 billion in 2017[2].

 

Accordingly, the capital invested soared from $1-1.8 billion annually (2012-2015) to $5.4 billion in 2016, $11.7 billion in 2017 and $17.3 billion in 20182.

 

 

[One thing worth noting – many Chinese life sciences companies included/collected in ChinaBio’ research are not purely biotechnology/biopharma companies. For some VC/PE funds, for the purpose of diversification or due to other reasons, they might invest in areas other than biotechnologies.]

 

  1. IPO and capital markets

 

Similar to more developed countries like US, IPO is the most common choice for biotech companies and the funds behind them. [Another common exit opportunity is M&A, which is less likely for Chines biotech companies due to the less matured industry and capital market]

 

However, historically China’s own capital markets won’t accept most biotech companies because they are in their R&D stage with no products. Listing on China’s A-share has many requirements including reaching certain revenue and profit targets, which is very different from listing on NASDAQ. The lack of exit opportunities also (partially) explains the lack of funding in previous years. With the rise of VC/PE investments in Chinese biotech companies, appropriate exit options are needed/expected.

 

Starting from April 30 2018, Hong Kong Stock Exchange got a much anticipated listing pathway official for pre-revenue biotech companies[3],[4].

 

Five Chinese biotech companies went on HKSE via the new rule in 2018, raising nearly US$2.4 billion – Ascletis Pharma $400 million, BeiGene $903 million, Hua Medicine $114 million, Innovent $485 million, Shanghai Junshi $453 million[5],[6].

 

[The first few biotech companies listed on HKSE using the new rule are those large and “first-tier” startups; I will expect smaller IPOs in the coming years]

 

Another new board “Kechuang”, or tech board by Shanghai Stock Exchange is also going to welcome pre-revenue biotech companies starting in 2019[7]. No such listing has happened yet.

 

The capital market in China for biotech companies is still at an early stage. IPO is only one of the techniques. For example, while Nasdaq-listed biotech firms have raised US$3.5 billion from 32 post-IPO “follow-on” share issuances in the period, none has been recorded in Hong Kong yet[8].

 

  1. Public sector / state funding

 

  • Overall scale

Direct funding sources to innovations in life sciences and biotechnologies from Chinese government was said to be over ¥60 billion over the last 5 years, according to Yuanbin Wu, an officer at China’s Minister of Science and Technology, on a conference in October 2018[9].

 

Another research article published on NEJM in 2014 said China’s public sector R&D expenditure in biomedical was $2 billion in 2012[10].

 

  • Structure

A 2011 paper discussed the structure of state sponsored biotech R&D at that time[11].

NSFC = The National Natural Science Foundation of China 国家自然科学基金委员会

MOST = The Ministry of Science and Technology of the People’s Republic of China

 

There were some consolidations happening, especially for programs within MOST, which are now under one umbrella – National Key R&D Program of China (国家重点研发计划)[12].

 

And in 2018, China planned to merge NSFC under MOST[13].

 

  • NSFC

Direct supporting from NSFC totaled ~¥26 billion in 2018[14], including ¥11.2 billion available in its General Program (with ¥1.8 billion in life sciences and ¥2.5 billion in medical sciences)[15]. NSFC’s major programs are detailed below.

 

2018 National Natural Science Foundation of China (Jan 1, 2018 – Oct 24, 2018)

NSFC program names Total (all disciplines)

(¥, millions)

 Life Sciences

(¥, millions)

 Medical Sciences

(¥, millions)
General Program
面上项目		      11,152.89     1,774.7     2,521.20
Young Scientists Fund

青年科学基金项目

        4,176.44        582.40        886.80
Fund for Less Developed Regions

地区科学基金

        1,103.33        292.60        312.00
Key Program

重点项目

        2,054.42        323.00        352.70
National Science Fund for Distinguished Young Scholars杰出青年基金项目           682.85          87.50          84.00
Joint Research Fund for Overseas Chinese, Hong Kong and Macao Young Scholars海外及港澳学者合作研究基金项目             54.00            9.00            9.72
Excellent Young Scientists Fund

优秀青年基金项目

           520.00          75.40          65.00
Total      19,743.93     3,144.60     4,231.42

 

In terms of acceptance rate, for example, NSFC General Program accepted ~20% of projects across all disciplines in 2018 (specifically, life sciences 24% and medical sciences 17%). A history analysis of the fund’s overall acceptance and support is discussed in this article[16].

 

  • MOST

According to MOST’s 2018 budget, National Key R&D Program of China (国家重点研发计划) receives a budget of ~¥27.7 billion in 2018. Another program under MOST is National Science and Technology Major Project (国家科技重大专项), which receives a budget of ~43.8 million[17]. (both numbers are for all disciplines; allocation for biotech related projects is not available)

 

There are other forms of supports from both central and local governments for biotech companies in China, including tax-cut, low-cost infrastructure, etc.[18]

 

  1. Other corporate involvement

 

While China doesn’t have many big pharma companies that are financially strong, some giants in tech and insurance (Baidu, Tencent, Alibaba, PingAn, etc.) have provided certain funding to areas they are interested, usually involving digitalization, data or AI, such as genomics, diagnostics and telemedicine[19].

[1] http://www.chinabiotoday.com/articles/China-Life-Science-2018

[2] http://www.chinabiotoday.com/custom/ChinaBio_State_of_Life_Science_2019%20-%20Jan%202019%20-%20China%20Showcase%20-%20DIST(1)%20-%20Copy%201.pdf

[3] https://www.scmp.com/comment/insight-opinion/article/2143267/hkexs-new-listing-rules-will-bring-tech-economy-hong-kong

[4] https://www.hkex.com.hk/-/media/HKEX-Market/Listing/Rules-and-Guidance/Listing-Rules-Contingency/Main-Board-Listing-Rules/Equity-Securities/chapter_18a.pdf?la=en

[5] https://www.hkex.com.hk/-/media/HKEX-Market/Listing/Getting-Started/HKEX-Biotech-Newsletter-Issue-1.pdf

[6] https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/finance/deloitte-cn-mna-medicine-and-biotechnology-industry-driven-by-innovative-drugs-zh-190412.pdf

[7] https://www.spglobal.com/marketintelligence/en/news-insights/trending/amoyKnMDGMXvpAJ-p0aiHA2

[8] https://www.scmp.com/business/investor-relations/ipo-quote-profile/article/3012766/shanghai-tech-board-unlikely

[9] http://www.gov.cn/xinwen/2018-10/29/content_5335500.htm

[10] http://rwjcsp.unc.edu/downloads/news/2014/20140102_NEJM.pdf

[11] https://hal.archives-ouvertes.fr/hal-00592303/document

[12] https://baike.baidu.com/item/%E5%9B%BD%E5%AE%B6%E9%87%8D%E7%82%B9%E7%A0%94%E5%8F%91%E8%AE%A1%E5%88%92/19395314

[13] http://www.nsfc.gov.cn/csc/20340/20289/24107/index.html

[14] http://www.xinhuanet.com/2019-03/27/c_1124287185.htm

[15] http://www.nsfc.gov.cn/nsfc/cen/xmtj/pdf/2018_table.pdf

[16] http://www.nsfc.gov.cn/csc/20345/20348/pdf/2018/201802150.pdf

[17] http://www.most.gov.cn/mostinfo/xinxifenlei/czyjs/201804/P020180413411369061914.pdf

[18] https://www.hsmap.com/static/%E3%80%8A%E4%B8%AD%E5%9B%BD%E7%94%9F%E7%89%A9%E5%8C%BB%E8%8D%AF%E4%BA%A7%E4%B8%9A%E5%8F%91%E5%B1%95%E8%93%9D%E7%9A%AE%E4%B9%A6%E3%80%8B.pdf

[19] https://www.ubs.com/global/en/wealth-management/chief-investment-office/our-research/discover-more/2018/china-biotech/_jcr_content/mainpar/toplevelgrid_738393885/col2/linklist/link.0452222404.file/bGluay9wYXRoPS9jb250ZW50L2RhbS9hc3NldHMvd20vZ2xvYmFsL2Npby9kb2MvY2hpbmEtYmlvdGVjaC1yZXZvbHV0aW9uLWVuZ2xpc2gtZXgtdXMucGRm/china-biotech-revolution-english-ex-us.pdf

Teva (4): Acquisition

Understanding Teva’s genes

[an excerpt from Knowledge@Wharton: Changing the Prescription for Israel’s Teva]

The (generic drug) industry began to consolidate during the 1960s and 1970s, and Teva emerged as the largest and most dynamic firm in the sector, thanks primarily to Eli Hurvitz, who served as CEO from 1976 to 2002 and as chairman from 2002 to 2010.

Opportunity knocked on Teva’s door when the U.S. Congress passed the Hatch-Waxman Act in 1984. The legislation created incentives for generic drug companies to challenge other firms’ patents, even before they expired, with the goal of reducing the cost of drugs in the U.S. Hurvitz positioned Teva to use Hatch-Waxman as its springboard to becoming a major player in the generics sector.

“Teva succeeded in its strategy,” says Steven Tepper, an Israeli analyst who has been following Teva for many years. “It not only worked really hard at getting its production costs down, it also developed considerable expertise in the legal aspects of the generic drugs business — how to be the first to file for generic versions of patented drugs [the law awarded a period of exclusivity to the first generic version, during which time profit margins would be higher], and how to manage the testing and licensing process. Later, Teva became adept at acquiring other companies and integrating them into the group.”

The strategy worked so well that today, Teva is the largest generic drug company in the world. Achieving this designation was a conscious decision on the part of Teva’s leadership: It was achieved via a series of large acquisitions over a five-year period, beginning with IVAX, an American rival bought for US$7.4 billion in January 2006; Barr (also in the U.S.) for US$7.46 billion in December 2008; German company Ratiopharm in March 2010 for US$5 billion, and Cephalon in May 2011 for US$6.8 billion.

“Levin was instrumental in bringing Michael Hayden to Teva as head of R&D, and together they formulated a corporate strategy for Teva that distinguished it from its competitors and also explains why Teva had to acquire either Mylan or Allergan,”

“Levin and Hayden sought to marry Teva’s proven capabilities in the efficient production of generic drugs with the company’s in-house R&D capabilities, themselves enhanced by a series of acquisitions. The goal is to turn generic drugs into specialty products, for instance by giving them a special formulation or method of application — something that doesn’t change the essence of the drug, but de-commoditizes it and allows for a higher price, higher margins and hence greater profitability.”

– Steven Tepper, pharma and biomed analyst at Migdal Capital Markets and regarded as a top Israeli analyst in this sector

The environment for Teva in 2015

[Knowledge@Wharton: Why Teva Paid $40.5 Billion for Allergan’s Generic Business]

    • The number of ‘ethical’ or proprietary drugs coming off patents in the next few years is going to be much smaller than has been the case over the past decade or so
    • The drug producers are facing a rapid process of concentration among their main buyers — especially in the critical U.S. market, where there are now three dominant companies. This, in turn, is forcing the manufacturers to consolidate their ranks, so as to better match the greater bargaining clout of their customers. The entire pharma industry is caught up in a whirlwind of enormous deals. Data from Thomson Reuters shows that as of July 23 — prior to Teva’s Allergan acquisition — M&A deals in the health care industry so far this year totaled almost $400 billion and were up some 80% over the equivalent period of 2014
    • With Copaxone’s patents going to expire, Teva needs to find supports to drive the growth or to make-up the hole – manage the “patent cliff” and the stock price

There were three acquisition targets: Sandoz (Novartis), Mylan and Actavis (Allergan).

First proposal: Mylan

On April 21, 2015, Teva proposed to acquire mylan for $82.00 per share in cash and stock. ($40 billion acquisition, 50 percent cash and 50 percent stock)

Just two weeks before, Mylan made an offer to acquire Perrigo with a 25% premium, which failed later in November.

A timeline compiled by Reuters.

April 8, 2015: Mylan offers to buy Perrigo for about $29 billion in cash and stock in a move that some analysts suggested was an effort to help fend off a $40 billion acquisition by larger rival Teva Pharmaceuticals Industries

April 24, 2015: Mylan goes hostile with a sweetened bid of $60 plus 2.2 Mylan shares, valuing Perrigo at $31 billion; Perrigo rejects offer

April 27, 2015: Mylan rejects Teva’s offer

April 29, 2015: Perrigo rejects Mylan’s second raised bid of $75 and 2.3 Mylan shares for every Perrigo share, or $34.1 billion

April 29, 2015: Teva sends letter to Mylan’s Board

July 23, 2015: Dutch foundation linked to Mylan adopts poison pill in efforts to block takeover by Teva, citing potential job losses

July 27, 2015: Teva drops its hostile pursuit of Mylan, decides to buy Allergan Plc’s generic business in a deal worth $40.5 billion

Aug. 13, 2015: Mylan lowers the percentage of Perrigo shares it needs to control the company to just over 50 percent from its original plan of 80 percent

Sept. 14, 2015: Mylan launches a tender offer in a move to lure Perrigo investors to support its take-over efforts

Sept. 17, 2015: Perrigo recommends shareholders to reject Mylan’s tender offer, which was set to expire on Nov. 13, saying it substantially undervalued the company

Oct. 22, 2015: Perrigo announces its plans to lay off 6 percent of its global workforce and buy back shares worth $2 billion

Nov. 13, 2015: Mylan fails $26 billion bid in tender offer as it was unable to secure at least half of Perrigo’s shares

After Mylan’s acquisition of Perrigo failed, Mylan shares were up about 10 percent at $47.39 in premarket trading, while Perrigo’s were down 9.3 percent at $141.99.

Teva said its offer should be more attractive to Mylan shareholders than the proposed purchase of Perrigo, representing a 48 percent premium to the company’s share price before speculation of a deal surfaced on March 10. When Teva made the proposal, Mylan shares were up 8.9 percent at $74.12 in afternoon Nasdaq trading, while Teva rose 2.0 percent to $64.55 on the New York Stock Exchange. Perrigo fell 2.2 percent to $193.79. (Reuters)

Plan B: Allergen

On July 27, 2015, Teva made an offer to buy Allergan’s generics unit with $33.75 billion in cash and Teva shares valued at $6.75 billion (close to 10% stake in Teva).

  • pro forma revenues of approximately $26 billion and combined EBITDA of approximately $9.5 billion anticipated in 2016.
  • No shareholder vote required at Teva or Allergan
  • Mylan shares fell nearly 14% to $57.03 Monday, while Perrigo gained 3.8% to $193.67.
  • For Allergan, the Teva deal provides it with cash to pay down debt and allows the company to focus more on lucrative brand-name drugs.

[WSJ: Teva to Buy Allergan Generics for $40.5 Billion]

Source: Teva Presentation

Teva Presentation of Actavis Acquisition

Question: how to finance the deal…

According to Teva’s Q2 2015 result,  at June 30, 2015

    • cash and investments: $2.8 billion.
    • short-term debt: $3.0 billion
    • senior notes and loans: $9.5 billion

Teva Pharmaceotical (3): Decline in Copaxone

Teva Copaxone Sales | Source: Teva quarterly reports

New Dosage by Teva

Teva has been preparing for the entry of generics with a new dosage of three-times-a-week.

In May 2013, Teva announced FDA acceptance of sNDA for Copaxone 40mg/ 1mL, a higher concentration dose of COPAXONE® that offers a less frequent three times a week dosing regimen.

Teva received the approval in January 2014 as previously mention in Copaxone’s history.

In 2015 first quarterly report,  Teva said Copaxone® 40 mg/mL accounted for 66% of total Copaxone® prescriptions in the U.S. And the US sales decline compared with 2014 Q1 mainly reflects unusually strong sales in the first quarter of 2014 due to inventory stocking in connection with the launch of Copaxone® 40 mg/mL in January 2014.

First Generic

First generic of Copaxone, Glatopa, was proved in April 16, 2015. 

The approval is for glatiramer acetate in 20 mg/ml daily injections.

Glatopa was developed by Momenta Pharmaceuticals and marketed by Sandoz, a Novartis company.

One month later, the Sandoz launched the drug in the US.

First 40mg/ml Generic Approval

In October 2017, Mylan received the long-waited approval for both dosage versions. Mylan also confirmed the launch in US one day after.

Shares in the Israeli company (Teva) were down 13% this morning – many were not expecting the FDA verdict until next year. Umer Raffat at Evercore ISI attempted to quantify the damage: earlier than expected loss of revenues could result in an annualised $480m to $640m being shaved from consensus operating profit estimates, he believes. [EvaluatePharma]

It’s a major lift for Mylan, whose anticipated 20-mg knockoff of the multiple sclerosis star has been conspicuously missing for years. A team of Novartis’ Sandoz and Momenta zoomed ahead with an April 2015 approval of their own version, Glatopa, which last year helped Sandoz’s biopharmaceuticals unit grow 25% to $772 million in sales. [FiercePharma]

According to the FDA approval letter, Mylan was one of the first applicants to submit a substantially complete ANDA for Glatiramer Acetate Injection, 40 mg/mL, containing a Paragraph IV certification. Therefore, Mylan and other first filers may be eligible for 180 days of generic drug exclusivity but FDA has not made a formal determination on exclusivity at this time.

Notably, the approval for Mylan comes a day after the FDA commissioner, Scott Gottlieb, released draft guidance to help speed the approval of complex generics like Copaxone. If any were needed, this earlier than expected green light provides further evidence that the US regulator is determined in its efforts to smooth the path to market for a wider range of copycat medicines.

Source: EvaluatePharma

 

Teva Pharmaceutical (2): Reliance on Copaxone

How important is Copaxone to Teva

Revenue 1/5

Copaxone = 21.3% of Teva total revenue in 2013…

  • Copaxone reached its global peak sales of $4.3 billion in 2013
  • In 2013 Teva, with total revenue over $20 billion, had a generic drug business close to $10 billion and specialty drug sales of $8.4 billion (Copaxone accounted for more than half of the specialty drug business)

Profitability 1/2

…while made 50.8% of Teva’s total profitability in 2013

  • Copaxone contributed a segment profitability (gross margin – S&M – R&D) of $3.3 billion, with a very healthy margin of 76%
  • Other specialty drugs and generic business had a margin of 32% and 17% respectively
  • Teva’s total profitability (gross margin – S&M – R&D) was $6.4 billion in 2013

Two “bad” (for Teva) developments in 2013

Biogen’s Tecfidera approved by FDA, which would become the leading MS drug in 2017

  • The United States Food and Drug Administration (FDA) announced on March 27, 2013 that it has approved Tecfidera™ (dimethyl fumarate or DMF, formerly known as BG-12) as a first-line therapy for the long-term treatment of relapsing forms of multiple sclerosis (MS).
  • Tecfidera is administered in pill form orally (by mouth) and is the third oral DMT approved for MS. The approved dosage is 240 mg to be taken two-times daily.
  • FDA approved labeling 

court ruling made first generic launch 15 months earlier than expected

Teva Pharmaceutical (1): MS and Copaxone

Copaxone is one of the leading drugs for multiple sclerosis (MS).

What is MS?

Multiple sclerosis (MS) is a chronic inflammatory demyelinating disease of the central nervous system affecting more than 2 million individuals globally and approximately 400 000 in the United States. [paper]

多发性硬化症（multiple sclerosis，MS）是一种中枢神经系统脱髓鞘疾病，病程中常有缓解复发的神经系统损害症状。多发于青壮年，多数患者是20～40岁的女性。[药事纵横]

在中枢神经纤维外面有一层髓鞘，起着保障神经电信号的正确传导的作用。MS患者的免疫系统会异常地攻击髓鞘，引起炎症，使巨噬细胞“吃掉”髓鞘，中枢神经纤维传导信号的速度和准确度就会受到影响，开始出现神经系统受损的症状。常见的症状有视力下降、复视、肢体感觉障碍、肢体运动障碍、共济失调、膀胱或直肠功能障碍等。[药事纵横]

MS 通常分为四类，其中复发缓解型多发性硬化症 relapsing-remitting MS (RRMS) 占比约 85%。[药事纵横]

Relapsing forms of MS include clinically isolated syndrome (CIS; a first demyelinating episode), relapsing-remitting MS (RRMS), secondary-progressive MS, and progressive-relapsing MS. The symptoms of MS can be highly variable, both in severity and duration, but may include visual disturbances, bladder/bowel dysfunction, weakness, impaired balance, vertigo, numbness, tingling, pain, and cognitive dysfunction. [paper]

Source: Multiple Sclerosis Association of America

Among the available drugs for MS, Copaxone has been the best-selling drug for years until 2017. In 2017 H1, Copaxone sales = $2.296 billion while Tecfidera by Biogen had a total revenue of $2.069 billion. [药事纵横]

During 2017 H1, Copaxone sales declined rapidly and made Tecfidera the best-selling drug for MS in 2017.

Available drugs and classification

The past decade has seen a dramatic change in the US MS-treatment landscape. While no cure for MS is currently available, treatment options exist to reduce the frequency of relapses, manage symptoms, and slow disease progression. Many US Food and Drug Administration (FDA)–approved disease-modifying therapies (DMTs) are currently available in the US market for patients with relapsing forms of MS, including interferon beta-1b (Betaseron®4, Extavia®), interferon beta-1a (Avonex®6 and Rebif®), glatiramer acetate (Copaxone8), natalizumab (Tysabri®), fingolimod (Gilenya®), teriflunomide (Aubagio®), dimethyl fumarate (Tecfidera®), alemtuzumab (Lemtrada®), peginterferon beta-1a (Plegridy®), and daclizumab (Zinbryta™). In general, the currently available medications primarily target the mechanisms that underlie inflammation. Early and ongoing treatment helps to minimize early inflammation, reduce damage in nerve fibers (axons), and reduce loss of brain tissue. The anti-inflammatory effects of these agents are largely believed to result from the inhibition of T-lymphocyte proliferation, from a shift of the cytokine response from an inflammatory response to an anti-inflammatory profile, and/or from a reduction in the migration of inflammatory cells across the blood–brain barrier. More recently, ocrelizumab (Ocrevus™) became the first and only DMT approved for the treatment of primary progressive and relapsing forms of MS. Although the precise mechanism by which ocrelizumab exerts its therapeutic effects in MS is unknown, it is presumed to involve the depletion of pre-B and mature B lymphocytes. [paper]

Source: 药渡

Copaxone History

Glatiramer acetate, also known as copolymer-1, is a heterogeneous mixture of peptides comprising 4 amino acids and is similar to myelin basic protein. Copolymer-1 was first discovered in the late 1960s during research to produce an antigen capable of inducing experimental autoimmune encephalomyelitis (EAE), an animal model of MS. [paper]

Following its discovery and the accumulation of preclinical data supporting its use as a therapeutic agent in MS, the clinical evaluation of GA was initiated in the late 1970s. Intensive clinical research has since been conducted on GA to establish its efficacy and safety as a DMT for MS, resulting in its initial approval for RRMS in 1996 and for clinically isolated syndrome (CIS) in 2009, followed by a subsequent label change to the current indication of relapsing forms of MS along with approval of a higher dose and less frequently administered version of GA in 2014. [paper]

Source: Two decades of glatiramer acetate: From initial discovery to the current development of generics