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DewDiligence

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DewDiligence

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Re: DewDiligence post# 4037

Sunday, 07/08/2007 5:43:28 AM

Sunday, July 08, 2007 5:43:28 AM

Post# of 19309
A recent biogenerics report by Cowen outlined the
strengths and weaknesses of some of the players and
prospective players in the FoB arena. Following is
an excerpt about the Big 3: TEVA, NVS, and BRL.
(PLX is included in the discussion of Teva.)


>>
Teva
Manufacturing Capacity, Marketing Presence,
Tev-Tropin / Copaxone Experience Provide
Strong Competencies

We believe that Teva is among the handful of generic drug companies that have the capability to become an early player in a generic biologics / biosimilars space. Teva appears to have the manufacturing capability for a range of biologics and the marketing sales force, and its experience with Tev-Tropin [hGh] provides an initial flavor of a biologics market. In addition, Teva’s experience with Copaxone gives it credibility in the biologics space.

In terms of manufacturing and scientific competency, Teva has R&D operations dedicated to the development of biopharmaceutical products located in Lithuania, China, Mexico, and Israel. Teva’s competency covers recombinant protein expression and production, including genetic engineering, recombinant bacterial fermentation, mammalian tissue culture, protein purification, and the development of analytical methods and formulation.

Specifically, Teva’s Lithuanian subsidiary develops and manufactures generic recombinant protein bulk substances. Teva’s finished dosage biopharmaceutical manufacturing facility in Toluca, Mexico, became operational in 2002. Teva also has a 45% ownership interest in Tianjin Hualida Biotechnology Company Ltd., a biopharmaceutical development and manufacturing company located in China and capable of producing bulk recombinant proteins and finished products.

Teva subsequently increased its interest in Hualida to 60%. Hualida’s main product is Interferon Alpha 2b [a knock-off of SGP’s Intron-A] used in the treatment of hepatitis and certain types of cancer which is marketed in China. Over the next few years, Hualida plans to register and bring to market additional products from Teva’s oncology portfolio presumably in China.

Teva has also signed an agreement with Procognia (Israel) Ltd. under which Procognia will supply Teva services and access to its proprietary glycoanalysis technology on an exclusive basis [#msg-13432480].

Teva has a sales and marketing team in place in the U.S. via its Gate Pharmaceuticals division, which is marketing its TEV-Tropin human growth hormone. Via Sicor, Teva has been producing and selling human growth hormone and alpha interferon for the Eastern European markets for a decade, so is well-positioned to compete in both the U.S. and European generic biologic markets.

In addition, during 2006, work on the transdermal hGH Teva/Transpharma joint project continued. Transdermal hGH is based on a proprietary transdermal technology licensed by Teva from Transpharma Medical Ltd. under a 2004 agreement. This product is intended to provide children and adults with an alternative to the currently injected therapy.

Teva also appears to be gearing up to compete in the orphan diseases sector. In September 2006, Teva and Protalix Ltd. signed a collaboration and licensing agreement for the development of two proteins, using Protalix’s plant cell culture platform [#msg-13600478]. Under the agreement, the two companies will collaborate on research and development of the proteins utilizing Protalix’s expression system. Protalix will grant Teva an exclusive license to commercialize the developed products in return for royalty and milestone payments to be made to Protalix upon the achievement of certain pre-defined goals. Protalix will retain certain exclusive manufacturing rights.

Protalix claims that the estimated cost of production of human therapeutic proteins with its system is substantially lower than in mammalian cell-based systems as well as of transgenic plant-based systems using field-grown plants. The company holds a U.S. and European patent for its bioreactor and platform technology. Additional patent applications for the company’s products and technologies have been submitted.

Protalix’s lead product, prGCD, is a proprietary plant cell expressed GA-GCB enzyme for the treatment of Gaucher Disease, similar to Genzyme’s Cerezyme. (Shire is also pursuing this opportunity.) Protalix received FDA approval to commence Phase I clinical trials of prGCD under an IND (Investigational New Drug) application. The Phase I clinical study was recently completed and Protalix believes that the promising data presented in the final clinical report of such trial will enable Protalix to proceed to the next phase of clinical testing. Protalix is taking the appropriate steps in order to commence a Phase III pivotal trial of prGCD.


Novartis / Sandoz
Early Pioneer in Generic Biologics

We view Sandoz as the pioneer in the generic biologics space given its 505 (b)(2) experience with Omnitrope, substantial manufacturing capability and the position of its parent Novartis as a biotech leader. Sandoz’s recombinant human growth hormone Omnitrope received marketing authorization in Australia in September 2004 and was launched there in November 2005.

In April 2006, the European Commission granted Marketing Authorization for Omnitrope, and the product was launched in the same month in Germany, followed in November by the UK and the Netherlands in December. In the U.S., Sandoz received regulatory approval for Omnitrope in May 2006 [#msg-11358021].

In terms of manufacturing and R&D, Sandoz has indicated that its annual investment in biopharmaceuticals exceeds $100MM. Sandoz has the capability for commercial production of recombinant products from mammalian cell culture at its 3,000L and 13,000L fermentation-scale facility in Schaftenau, Austria. Sandoz has noted that the facility meets the requirements for recombinant products derived from mammalian cell culture and meets cGMP requirements and is completely separate from any microbial activity.

Sandoz also historically has been involved in industrial scale fermentation of interferon alpha. The company was producing recombinant bovine somatropin for Pfizer. Sandoz also has the capability for microbial fermentation of recombinant organisms such as E. coli and yeast, with the potential for fermentation at various scales.

Sandoz’s biotech collaborations include Monsanto, Henkel, Celltech, and Scios and Momenta. In July 2006, Sandoz signed an exclusive collaboration agreement with Momenta Pharmaceuticals, which specializes in the characterization of complex pharmaceuticals, to develop complex generics and follow-on biotechnology pharmaceuticals. As part of the arrangement, Sandoz purchased approximately 4.7MM shares of Momenta common stock for an aggregate price of $75MM. Sandoz and Momenta plan to jointly develop, manufacture and commercialize four drug candidates in the collaboration. Through this agreement, the two companies are attempting to develop generic Lovenox and generic Copaxone, as well as two undisclosed protein therapeutics.


Barr Pharmaceuticals
Manufacturing Capabilities, But Questions Remain

While we believe that Barr could potentially be a significant player in the generic biologics market (and indeed has been the most vocal when discussing the opportunity), we still see a few hurdles that will need to be addressed. We believe that Barr will need to continue to further build-out its manufacturing capabilities, although the Pliva acquisition was a significant step forward.

Barr’s biosimilars manufacturing and formulation capability is largely based out of Pliva’s Zagreb R&D facility. The facility concentrates on the development of new small molecule generic products for the US market, biosimilar products, improved chemical entities and complex generic formulations. Currently, Pliva’s two most advanced projects are EPO and G-CSF, relying on extensive comparability studies between respective Pliva products and reference products from markets of interest. Pliva’s EPO is a generic version of Johnson & Johnson’s Eprex/Procrit (epoetin-alfa) and is approved in Croatia for the stimulation of red blood cell production in patients undergoing dialysis therapy for chronic renal failure and patients undergoing chemotherapy treatment. According to Pliva, the total Croatian EPO market was about $6MM in 2004.

Barr also inherited Pliva’s G-CSF program. G-CSF is the generic version of Amgen’s Neupogen (filgrastim), which is primarily indicated for the regulation of white blood cell production in the treatment of cancer patients with chemotherapy induced neutropenia. In addition to G-CSF, Barr has expertise in biologics through its Adenovirus Vaccine program with the U.S. Department of Defense (DOD). In September 2001, the DOD awarded Barr a six-year contract to develop two oral adenovirus vaccines. Barr also opened an R&D research center in Goa, India, to increase its biologic development.
<<

“The efficient-market hypothesis may be
the foremost piece of B.S. ever promulgated
in any area of human knowledge!”

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