After a fairly rosy few years pushing forward with its various biosimilar development projects and commercialization alliances, Formycon has now encountered choppier waters, making a trio of announcements – two linked directly to pricing pressures on US biosimilars – that wiped more than a third off its share price yesterday.
The German biosimilars developer has revealed that:
- Fierce US price competition on Stelara (ustekinumab) biosimilars is forcing Formycon to significantly re-evaluate its expectations ahead of its imminent FYB202 Otulfi (ustekinumab-aauz) US biosimilar launch with partner Fresenius Kabi;
- Pricing pressures on ranibizumab in the US mean that Sandoz may “pause” commercialization and rethink its strategy for Formycon’s FYB201 Cimerli (ranibizumab-eqrn) version of Lucentis, marketing of which was only recently taken on by Sandoz from former partner Coherus; and
- Formycon is planning to save time and money by terminating a Phase III trial for its FYB206 proposed biosimilar to Keytruda (pembrolizumab), while still believing it can win US Food and Drug Administration approval for the candidate based on its Phase I study and analytical data.
Any one of these announcements would have represented a significant development for the company – but all three at once carried sufficient gravity that Formycon convened a same-day extraordinary conference call to provide more context to analysts, seeking to reassure stakeholders of its position on all three items.
Stelara Pressures Force ‘Adjustment In Valuation’
On ustekinumab, Formycon explained that “an emerging, significantly higher-than-expected price discount” for Stelara biosimilars in the US made it likely that the firm would “require an adjustment in the valuation of FYB202,” which is approved in the US and set to launch in a matter of days, on 22 February.
“In co-ordination with commercialization partner Fresenius Kabi, as part of the imminent market launch,” Formycon said it “anticipates that the valuation model and balance sheet measurement for FYB202 will need to be reviewed and adjusted” on the basis of new assumptions for expected product sales in the US.
Based on “preliminary calculations,” Formycon said it currently expects the adjustment to result in “a non-cash impairment requirement in the high double-digit to low triple-digit million range,” although “the exact figures are currently being calculated and audited by the company as part of the year-end financial audit.”
CEO Stefan Glombitza reflected that “for biosimilars in the so-called Pharma Benefit market segment in the US, it is becoming apparent that the market opening for biosimilars is still progressing slower and requires greater price discounts than previously anticipated. This will also affect our product.”
During the call, he outlined that Formycon and Fresenius had been analysing the ustekinumab market coming up to launch, and had found that discounts were now expected to be “more substantial than initially expected in our last assessment,” with a “more competitive pricing environment from the outset.”
Citing the high level of discounts seen for Humira (adalimumab) biosimilars in the market – around 85% for certain products – Glombitza noted that it had been hoped that learnings from the adalimumab experience would create “sufficient tailwinds” for the ustekinumab market to “evolve differently.” But on the basis of the latest analysis, significant discounts were still seen as likely to be needed to gain a foothold in the ustekinumab market, he suggested.
Nevertheless, the CEO said that the value contribution from Otulfi would still be “very significant” and the product would be a sustainable growth contributor even after the adjustment, adding that the partnership with Fresenius Kabi “remains strong” and suggesting that commercialization efforts for the biosimilar would benefit from Kabi’s existing market presence.
Cimerli Faces Aggressive Discounting
Meanwhile, on Cimerli, Formycon said that it had initiated discussions with US partner Sandoz to evaluate the future commercialization strategy for the product “due to increasing price discounts offered by ranibizumab providers in the US.”
The only other Lucentis biosimilar approved in the US is Samsung Bioepis and Biogen’s Byooviz (ranibizumab-nuna), which entered the market in 2022 at a 40% discount to the originator – and was still holding at this level in late 2024, compared to Cimerli’s 30% discount, according to Samsung Bioepis’ most recent data. Biogen recently reported Byooviz sales down by a fifth to just $23.0m in the US last year, with Formycon’s comments suggesting that fresh discounts may have been implemented in 2025.
When Sandoz took over the Cimerli franchise from previous rights holder Coherus just under a year ago, Formycon had noted that, as of December 2023, Cimerli had “achieved a market share of 38% by volume in the US ranibizumab market and thereby continues to be the most successful biosimilar in this segment.” And during the latest call, Glombitza indicated that the figure had now risen to around half the market, with Cimerli maintaining a leading position.
However, the German firm said, as a result of its discussions with Sandoz on the future strategy for the product, “Formycon currently expects that the commercialization of FYB201/Cimerli will likely be temporarily paused. This would result in an extraordinary adjustment to the valuation model and the balance sheet measurement for FYB201, as well as the stake in Bioeq AG, amounting to a high single-digit to low double-digit non-cash million figure for the 2024 financial year.”
“In this context,” the company indicated, “Bioeq AG is exploring alternative commercialization strategies for the US,” with Formycon promising to “provide updates on further developments in due course.”
“Our partner Sandoz is observing increasing price discounts in the US and has informed us of planned adjustments to the marketing strategy,” Glombitza summarized, describing the move as a “tactical adjustment” and a “strategic realignment” as part of product lifecycle management that would likely involve an “intermediate pausing of commercialization, combined with a re-entry at a new level.”
“You have to continuously review the price/volume position in the market,” Glombitza indicated during the call, citing the complex dynamics of the US buy-and-bill market. Moreover, he emphasized that Formycon was working “closely” with Sandoz on the strategy, with Bioeq in “advanced discussions” with Sandoz to allow “sustainable value creation” – and the firms were also “counting on [Sandoz’s] expertise” in biosimilars to help define the way forward. However, he declined to offer further details of the partners' plans “due to the very competitive nature of such strategic measures.”
Despite the upheaval, Glombitza said Formycon remained convinced of the “long-term significance” of Cimerli in the US ophthalmology space.
Claiming ‘Pioneering Role’ With Change To Pembrolizumab Plans
Finally, Formycon revealed what it termed as “very good news” – an ambitious new strategy for its in-development FYB206 pembrolizumab candidate that will see it terminate its previously-announced “Lotus” Phase III trial in favor of a filing approach with the FDA that is solely based on Phase I and analytical data, waiving the usual Phase III trials.
Management emphasized during the call that the termination of the study was not for any negative reason, with “no quality or safety problems with our biosimilar.” Instead, the waiver was “rather reflecting a paradigm shift at the FDA” of considering biosimilar filings without Phase III data, which the firm said represented a “breakthrough for biosimilar development.”
Formycon had announced the start of Phase I studies for FYB206 in mid-2024, with its “Dahlia” trial comparing the pharmacokinetics, safety and tolerability of FYB206 with Keytruda in patients receiving adjuvant treatment for malignant melanoma. This was followed by the firm announcing the kick-off for Phase III trials the following month, with the parallel “Lotus” trial comparing the efficacy and safety of FYB206 with Keytruda in combination with chemotherapy in patients with non-small cell lung cancer.
But now, Formycon says that “positive feedback from the US FDA,” based on “intensive scientific dialogue” with the regulator, had led it to to “prematurely terminate the Phase III trial.”
“The executive board, after careful consideration, has concluded that the continuation of the study is no longer necessary for the development and approval of FYB206 in the US,” Formycon explained. “The therapeutic comparability of FYB206 with the reference drug Keytruda can be sufficiently demonstrated using data from the ongoing parallel study in the melanoma indication (“Dahlia”), combined with a comprehensive analytical program.”
Outlining the financial benefits of this approach, Formycon said that “according to preliminary estimates, discontinuing the Phase III trial could lead to investment savings in the high double-digit million range over the next few years, positively impacting the company’s cash flow statement and liquidity.”
Formycon characterized the development as the company taking a “pioneering role among pembrolizumab biosimilar developers” and “once again highlighting its expertise in the development of biosimilars,” while also “significantly strengthening working capital over the next few years.”
Last year, Glombitza had told Generics Bulletin that “the clinical program is a really complex one, an important one, for the FYB206 Keytruda biosimilar. And we are really working with a sense of urgency and quality to push that through, to stay on the grounds of being among the frontrunners.”
But in the wake of the latest announcement, the CEO was explicit that “the FDA has confirmed that extensive analytical data, together with the ongoing Phase I trial, will be sufficient to demonstrate the therapeutic comparability of our biosimilar candidate FYB206 with Keytruda. This eliminates the need for a Phase III trial for FYB206 – an important step that will not only shorten the development time but also significantly reduce investment.”
“This also highlights the importance of the quality of our analytical and pre-clinical data. Formycon is thus taking on a pioneering and leading role among Keytruda biosimilar developers.”
Confident That Phase III Waiver Is Acceptable To FDA
During the call, management did acknowledge some potential scepticism over the approach. “I assume you may be wondering how sure we can be that the FDA will eventually approve FYB206 without Phase III data,” acknowledged Formycon chief scientific officer Andreas Seidl.
But having discussed the program in “several scientific advice meetings with the FDA,” the agreement on the waiver approach had been documented in official meeting minutes and could therefore be relied upon as formal guidance, he indicated, even if the success of the filing would ultimately, “as always,” depend on the “totality of the generated data.”
Meanwhile, there would be no impact on extrapolation of indications, he indicated, provided that a high level of similarity could be demonstrated on an analytical basis.
Seidl also acknowledged that some stakeholders may be questioning whether it was the right approach to go “all in” on pembrolizumab in the US, especially given the pricing pressures already discussed for the Stelara and Lucentis biosimilars. But he noted that discounts varied a lot between different biosimilars, and also observed that pembrolizumab was not supplied through the Pharmacy Benefit Manager channel, as with adalimumab and ustekinumab.
Seidl also indicated that Formycon would be targeting other international markets outside of the US with its pembrolizumab candidate, and was optimistic that other regulators – such as the European Medicines Agency – would also adopt similar approaches to the FDA in accepting waivers of Phase III studies, provided that similarity could be otherwise demonstrated. That said, he noted that the ability to put together a strong enough submission without Phase III data was “very specific to each company and project” – meaning that a slew of other competitors entering the pembrolizumab race on the same basis was unlikely.
Asked during the call whether the FDA approach represented a broader policy change for the regulator or was more specific to FYB206, Formycon’s management suggested that the agency’s move towards reducing the data burden for biosimilar filers underlined a trend that started with the UK’s Medicines and Healthcare products Regulatory Agency, before being taken up by the EMA and now the FDA. And while it was seen as likely that other candidates would receive similar advice in future, Formycon again underlined that the success of any individual filings would depend on the quality of the dataset submitted.
Formycon was also asked during the call whether the change in approach on pembrolizumab made it more urgent for the company to find a marketing partner for the biosimilar. Management responded that the change in clinical approach did not mean any change to the partnering strategy, with the firm already in talks “with many different parties” over the Keytruda biosimilar. However, the company did suggest that the significantly lower budget and acceleration of development timelines as a result of the new approach only made the product “even more attractive” to potential partners.
Financial Impact Includes Impairment And Liquidity Benefit
Outlining the financial impact of all three announcements, Formycon indicated that full details would be provided no later than 27 March – when the company expects to report its full-year results for 2024 – but said that it “currently assumes that the key financial forecast figures for the 2024 financial year will not be affected by these adjustments,” adding that “achieving EBITDA and operating cash flow profitability remains [our] mid-term objective.”
While the company’s net result was “expected to be negatively impacted by the impairment related to FYB202 and FYB201,” on the other hand, “as the development costs for FYB206 have been capitalized on the balance sheet since 2022, future savings will not affect the income statement but will have a direct positive impact on liquidity. Accordingly, the company expects significantly positive effects in the high double-digit million range for the cash flow statement and working capital.”
Taking a broader overview of Formycon’s three announcements, Glombitza commented that “the latest developments in our projects underscore both the dynamics and the opportunities of the market environment.”
“Biosimilars have already amply demonstrated that they can achieve a sustainable market position in the long term and are based on a profitable business model,” the CEO underlined. And “our strategy remains focused on working with our partners to achieve a leading position in this dynamic environment.” Meanwhile, “at the same time, regulatory developments in the US indicate that the framework conditions for biosimilars continue to improve.”
