Monoclonal antibodies (mAbs) represent one of the most successful therapeutic drug classes, attracting billions of investment dollars for the biotechnology industry.
Last week AstraZeneca’s global biologics research and development arm, MedImmune, became the latest mAb player. MedImmune acquired Spirogen, a privately held biotech company focused on antibody-drug conjugate technology for use in oncology, for $440 million. In addition, MedImmune entered into a collaboration agreement with ADC Therapeutics to jointly develop two antibody-drug conjugate programs in preclinical development.
What are monoclonal antibodies?
Monoclonal antibodies are laboratory-produced molecules, carefully engineered to attach to specific defects in cells.
They mimic the antibodies the body naturally produces as part of the immune system’s response to germs, vaccines and other invaders.
Though frequently associated with oncology, monoclonal antibodies have also been researched and developed for serious diseases, including rheumatoid arthritis, multiple sclerosis, and Alzheimer’s disease.
Monoclonal antibodies are big business
Monoclonal antibodies are big business, accounting for 40 percent of the entire biotech drug market – and the market share keeps increasing. Sales are projected to reach more than $160 billion in the US alone over the next few years. Of the ten best-selling drugs in 2012, six of them were monoclonal antibody drugs, each with annual sales value exceeding US$5 billion.
Monoclonal antibodies have emerged as a major source of blockbuster drugs. In 2011, the sales of six monoclonal antibody agents, as Infliximab (Johnson & Johnson), Etanercept (Amgen), Bevacizumab (Roche), Rituximab (Roche),Adalimumab (Abbvie) and Trastuzumab (Roche), represented around 60% of the global monoclonal antibody market.
Pillars of strength for Big Pharma
Roche, the largest oncology company in the world, currently has the largest portfolio of approved monoclonal antibody treatments. In 2012 its sales value of seven monoclonal antibody products reached US$20 billion. Avastin, approved for the treatment of brain, colon, kidney and lung cancers, generated $6.3 billion in annual sales last year.Rituxan, used to treat chronic lymphocytic leukemia and non-Hodgkin’s lymphoma, generated $7 billion in 2012. Its third mAb pillar, Herceptin (approved to treat breast and stomach cancers), generated $6 billion in 2012.
Johnson & Johnson’s leading monoclonal antibody arthritis treatment Remicade enjoyed similar success, generating $6.1 billion in 2012. But no one can beat AbbVie’s best-selling monoclonal antibody drug Humira, an arthritis medication that recouped $9.3 billion in sales last year.
AbbVie continues its quest to find more blockbusters like Humira. In September 2013, it announced a global licensing agreement with Belgian biotech firm Ablynx. Under the agreement, AbbVie will gain rights to Ablynx’s monoclonal antibody ALX-0061 post completion of phase II clinical trials. ALX-0061 is currently being trialed in both rheumatoid arthritis and systemic lupus erythematosus.
Why monoclonal antibodies attract top dollar
With many popular drugs scheduled to lose U.S. market protection between 2013 and 2016, major drug makers are desperately looking to restock their pipelines. As the “patent cliff” draws closer, big pharma are looking to mAbs for the following reasons:
Therapeutic antibodies represent the most complex class of molecules for medical use. Their very specific binding properties are typically larger and more complicated to replicate by biosimilars. In fact, development, production and marketing of a copycat version of biological drugs already costs about 50 times the amount needed to launch a generic copy of conventional chemical drugs.
Some analysts expect price discounts of only 20-30 percent in markets affected by biosimilar competition. That’s modest compared with an average markdown of 90 percent for generic copies of conventional “small-molecule” chemical drugs. Large molecules, including monoclonal antibodies, also have higher than average FDA approval rates, compared to small molecules.
These advantages may help explain the premium values sought for monoclonal antibody treatments. Some biotech companies have attracted billion dollar price tags. In 2008, Eli Lilly & Co. acquired ImClone Systems, Inc. for $6.5 billion. ImClone’s only product – Erbitux®– had generated annual sales of approximately $1.3 billion in 2007. Therefore, ImClone was valued at a 5x multiple to prior year sales. In 2009, Bristol-Myers Squibb acquired Medarex, Inc. for $2.4 billion, offering $16 per share – a 90 percent premium to Medarex’s closing share price the same day.
While more recent acquisitions haven’t fetched the same figures, it demonstrates just how much big pharma is willing to pay for monoclonal antibody treatments, if and when the right opportunities come along.