When the former poster child for small biosimilars companies decides to go into proprietary biotech it cannot be taken as a good sign for the sector. Thus Momenta Pharmaceuticals' decision to cull nearly all of its Mylan-partnered pipeline and focus on novel early-stage assets should be taken as a clear sign that smaller groups are failing to prosper in biosimilar development.
Biosimilars have not become the low-cost, low-risk proposition they were once believed to be, at least in the US, and Momenta can hardly be blamed if it looks enviously at the valuations of its neighbours in Cambridge that have yet to launch a commercial product. Glatopa and phase III copycats of Humira and Eylea are now seen as a means to an end, the revenue being used to advance rare disease projects.
Momenta has asked its partner Mylan to take over development of five biosimilars projects, including an Orencia copycat, although the two parties are still in discussions. Executives had hoped for a clean exit through a sale of all projects, but this failed to materialise: on an analyst call Momenta's chief executive, Craig Wheeler, put the blame on overlapping portfolios and an “increasingly challenging political climate” related to overseas companies investing in US assets.
Failing to get a buyer for those five projects might have been the biggest disappointment of today for investors – shares fell 12% in early trading today.
To achieve the transition from biosimilars manufacturer, with a focus on analytic and process development, to biotech group, Momenta swept out its C-suite almost entirely, with Mr Wheeler staying in the top spot. In total, around half of the company's workforce has been laid off, about 110 people.
The group will continue to push forward with its wholly owned biosimilar version of Humira, M923, and Mylan-partnered Eylea competitor M710. Mr Wheeler said the company had chosen to continue with these because they could help defray the cost of phase III trials for the novel drug pipeline of M281, M230 and M254. The first of these, an anti-FcRn antibody, has completed phase I dosing trials and is on track to begin phase II studies in antibody-mediated autoimmune disorders.
In spite of the promise of new product revenue, a $321m cash pile, and a planned $250m in savings over five years, Mr Wheeler warned that the group would need to conduct a fund-raising in the next two years. This will also not have pleased investors.
The US government has been out front declaring its desire to get biosimilars onto the market to help bring prices under control. For Momenta this could have come just a little too late. As long as intellectual property and rebating continue to be a major barrier to biosimilar entry and growth, it might only be large companies that can afford to operate in this market.