Merck & Co. has become a leader in the race to bring a low-cost version of Amgen's rheumatoid arthritis blockbuster Enbrel (etandercept) to the market after gaining rights to a late-stage biosimilar version of the biologic developed by South Korea's Hanwha Chemical Corporation.

The companies announced a partnership June 13 in which Merck will develop and commercialize a biosimilar form of Enbrel, HD203, in all markets except Korea and Turkey, where Hanwha has retained marketing rights.

In exchange, Hanwha receives an undisclosed upfront payment, and is eligible for milestones related to technology transfer and regulatory progress, as well as tiered royalties on sales. The financial terms of the deal were not disclosed, but in published media reports, Hanwha put the total potential cost to Merck of the collaboration at $720 million. Merck declined to confirm that figure, but Merck BioVentures President Michael Kamarck said in an interview that the deal is heavily back-end loaded. Nonetheless, the financial arrangement is "symbolic of what we do see, which is the huge opportunity that Enbrel will provide in the biosimilar space," he said.

Merck has assembled a pipeline of biosimilar drugs since announcing the formation of Merck BioVentures in December 2008 (Also see "Merck’s Ambitious Plans For Follow-On Biologics" - Pink Sheet, 15 December, 2008.). The company has revealed plans only for a couple of products, however, including a granulocyte colony-stimulating factor referencing Amgen's Neupogen (filgrastim) and a pegylated version referencing Neulasta (pegfilgrastim). Earlier plans to develop a biosimilar version of Amgen's erythropoiesis stimulating agent Aranesp (darbepoetin alfa) were scrapped in 2010, given emerging safety issues with the class. Merck continues to stand by its goal of having five biosimilars in Phase III by the end of 2012 and says it is mainly interested in harder-to-replicate monoclonal antibodies, including Enbrel.

The rheumatoid arthritis drug, however, is believed to be the target of many biosimilar drug makers, though they have kept their pipelines closely guarded secrets. Enbrel is a hefty revenue generator in an expensive and crowded class of drugs, with a first patent expiration in the U.S. coming in 2012. The tumor necrosis factor inhibitor, approved for multiple auto-inflammatory conditions, generated sales of $3.54 billion in 2010, Amgen reported. Pfizer Inc. owns rights to the drug outside the U.S.

Both A Biosimilar And Brands In the Anti-TNF Space

Interestingly, Merck is a big player in the branded anti-TNF space, marketing a leading competitor to Enbrel, the anti-TNF Remicade (infliximab), as well as its successor Simponi (golimumab), both of which it gained rights to through the 2009 acquisition of Schering-Plough. Merck markets the drug in the U.S. and select international markets, while Johnson & Johnson Inc. owns most ex-U.S. rights. The two companies recently settled a dispute over the rights to those drugs, which arose in the wake of Merck's acquisition of Schering. The resolution calls for J&J to take over additional rights to Remicade and Simponi beginning July 1 in key international markets ([A#20110418]).

Worldwide sales of Remicade were $4.6 billion in 2010, J&J reported. Remicade has a lengthy marketing history, but has lost ground to competitors, including Abbott's Humira (adalimumab) because of its less convenient formulation (a once-monthly intravenous infusion) and a slightly higher risk of adverse reactions like infection.

Nonetheless, Remicade is an important brand to Merck and the launch of a lower-priced biosimilar version of Enbrel would be a noteworthy competitor that could further erode Remicade sales. Merck is opting to get a slice of that market instead.

"Although the products are somewhat competitive, they also have their own space in the marketplace," Kamarck said of the two drugs. "We believe there is plenty of space in the RA marketplace for both Remicade and a biosimilar Enbrel, and that is the business model we have going forward."

Hanwha's Drug Is Best And Latest, Merck Says

Merck had already been developing its own biosimilar version of Enbrel, Kamarck said, but switched gears to in-license the Hanwha compound because the South Korean firm's version is more advanced. It has demonstrated similarity to the originator molecule on analytic parameters and in pharmacokinetic/pharmacodynamic studies. A Phase III trial has started. "We were really excited when we discovered the Hanwha molecule was head and shoulders the best molecule that we had looked at, and in addition, it was the furthest along in terms of its clinical development," Kamarck said.

The Phase III trial, according to clinicaltrials.gov, will enroll 300 patients and is expected to run until June 2012. The primary outcome is equivalence between HD203 and Enbrel in rheumatoid arthritis patients by comparing ACR20 after 24 weeks of treatment. Secondary outcome measures include the efficacy of ACR20, ACR50 and ACR70 and safety and immunogenicity between the two groups.

South Korea has emerged as a hotbed of biosimilar drug development. The country's frontrunner in the space is Celltrion Inc., which is already partnered with several drug makers on biosimilar drug development. Celltrion signed an initial agreement with Hospira Inc. handing over U.S. and European rights to its biosimilars in 2009.

But getting a biosimilar monoclonal antibody to market in the U.S. won't be a straightforward path. FDA - after gaining the right to approve biosimilar drugs as part of health care reform package in 2010 - has yet to release any broad guidelines. The agency is, however, meeting with drug makers and discussing appropriate regulatory paths forward. FDA publicly disclosed that it has received eight pre-IND and IND applications for biosimilar products at a May 31 advisory committee meeting (Also see "Biosimilars: Eight Is Already More Than Enough For FDA" - Pink Sheet, 1 June, 2011.).

"It's hard to project exactly what timeline the molecule will have," Kamarck acknowledged, though he said Merck will engage in discussions with both U.S. and European regulators as soon as possible. He said FDA has thus far provided "great feedback" in early discussions.

Amgen Not Cowering To Patent Pressure

But patent challenges also exist. The health care reform statute laid out a lengthy legal process for challenging and negotiating patent expirations between biosimilar manufacturers and originator companies. Many on the biosimilar side have been displeased with the process, which they claim favors brand companies.

Merck - historically a brand drug company - says it has no plans to engage in patent challenges on the biosimilar front. How the company will be at the forefront of the space and its ability to separate entirely from the litigation hurdles is uncertain. "That will be part of the evolution of this business," Kamarck maintained.

Moreover, Amgen has long-term hopes for Enbrel and isn't about to bow down gracefully. During an analyst meeting April 21, CEO Kevin Sharer spoke about the 2012 patent expiration for Enbrel, a patent that covers manufacturing, and reassured investors that Enbrel is covered by a broad patent estate that extends to 2025.

"We believe that we will enjoy IP protection well beyond 2012, and we've demonstrated through time that we have both the will and the skill to defend our intellectual property, and we intend to do that with Enbrel" Sharer said.

-Jessica Merrill (j.merrill@elsevier.com)

Merck Lands Late-Stage Enbrel Biosimilar In Deal With South Korea's Hanwha

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