With a Chinese approval of PD-1 inhibitor serplulimab in March, Fosun Pharma’s Shanghai Henlius Biotech officially kicked off its transformation into an innovative biopharma company. Now, riding a sales boom, Henlius CEO Wenjie Zhang is looking to chart a path toward global expansion while fighting off concerns over the company’s anchor biosimilar franchise.
Having clarified serplulimab’s regulatory path with the FDA, Henlius is now searching for a partner to help bring the China-made PD-1 to the U.S. market, Zhang told Fierce Pharma in a recent interview.
This comes as Henlius and collaborator Accord Healthcare plan to file Henlius’ biosimilar to Roche’s Herceptin with the FDA by the end of this year. But at home, an expected expansion of China’s government-led price-cutting scheme is causing some investor unease.
Introducing a China-made PD-1 to the U.S.
Serplulimab, sold under the brand name Hansizhuang, was the 13th PD-1/L1 inhibitor approved in China. The drug’s original indication was previously treated microsatellite instability-high solid tumors regardless of location.
Early uptake “does not look like it was the 13th” entrant, Zhang said. With five months of sales in hand, Zhang said the company’s goal is to make it into the top five PD-1/L1 inhibitors in China by overall market share next year.
In large part, that ambition depends on an approval in newly diagnosed extensive-stage small cell lung cancer (ES-SCLC)—the same indication Henlius is targeting for an initial go-ahead in the U.S.—plus front-line squamous non-small cell lung cancer. The company’s goal is to replace PD-L1 inhibitors as the ES-SCLC market leader in China this year and take over three-quarters of the market next year, Zhang said.
In the U.S., serplulimab already boasts an FDA orphan-drug designation in SCLC, and it’s angling to become the first PD-1 inhibitor to treat front-line patients. Bristol Myers Squibb in late 2020 decided to withdraw Opdivo’s accelerated approval in previously treated SCLC after failing two confirmatory trials. Merck followed suit in March 2021, pulling Keytruda’s third-line SCLC use after a front-line trial flop.
The market is now dominated by two PD-L1 inhibitors. Roche’s Tecentriq, used alongside chemo, has been available in front-line ES-SCLC thanks to a 2019 FDA approval. In the IMpower133 trial, adding Tecentriq to chemo cut the risk of death by 30% as patients lived a median 12.3 months on the combo versus 10.3 months in the control group. AstraZeneca entered in 2020 after showing its Imfinzi-chemo cocktail could pare down the death risk by 27% compared with solo chemo. In the CASPIAN trial, patients who took Imfinzi and chemo lived a median 13 months, versus 10.3 months on chemo.
Serplulimab appeared to have the best data, although cross-trial comparisons should be taken with a grain of salt. In the phase 3 ASTRUM-005 trial, serplulimab’s chemo combo reduced the risk of death by 37% over chemo alone in newly diagnosed ES-SCLC patients, and the patients lived a median 15.4 months and 10.9 months, respectively.
Investigators conducted the trial in several countries, with about a third of patients being Caucasian. Problem is, the study didn’t include any of the U.S. population, and the trial used chemo as the comparator even though it started about half a year after Tecentriq’s U.S. nod. Those were the same reasons that recently tripped up Innovent Biologics and Eli Lilly’s PD-1 rival Tyvyt in front of the FDA.
After speaking with the FDA, Henlius now thinks it knows what it’ll take to satisfy the U.S. regulator. The company plans to run a U.S. bridging study of roughly 200 patients—including black and Hispanic representation—assigned to either receive serplulimab or Tecentriq, both on top of chemo, Zhang said. The FDA only wants to see a “numerical” difference in terms of tumor response rate rather than overall survival or progression-free survival, so the study should be quick, the Henlius CEO added.
By Zhang’s estimate, serplulimab could get an U.S. approval in about two years if everything go according to plan. For now, Henlius is tapping partners for marketing in the U.S. and Europe for all its products, but the company has “a little bit more thoughts” on serplulimab’s commercialization than for other products, he added.
“At this moment, we do not have the capacity, we do not have the resources” to market outside of China, Zhang said. “It’s really a part of this prioritizing our resource allocation at this moment.” But for the longer term, “we definitely are thinking about doing [global marketing] ourselves,” he said.
As for whether serplulimab can compete in the U.S., Zhang said he believes doctors will be guided by clinical data.
Pivoting from biosimilars to innovative drugs
The Chinese approval of serplulimab marks Henlius’ official pivot to an innovative biopharma shop. Formed in 2010, the Fosun-controlled company is best known for its biosimilar capabilities.
In 2019, China approved its very first biosimilar, a Rituxan copy made by Henlius. The company’s Herceptin copycat was the first China-made biosim cleared in Europe. It also markets biosimilars referencing AbbVie’s Humira and Roche’s Avastin in China. In June, Organon put down $73 million upfront to obtain ex-China rights to Henlius’ candidates referencing Roche’s HER2 drug Perjeta and Amgen’s bone med Prolia/Xgeva.
“Definitely we have established ourselves as the leader of the [biosimilar] industry in China by not only the number of compounds but also the scale of manufacturing capacity and revenue,” Zhang said.
All told, Henlius more than doubled sales in the first half of 2022 to reach 1.29 billion Chinese yuan ($188 million), mainly thanks to fast growth from the Herceptin biosimilar.
But Zhang recently found himself repeatedly fielding investor questions about the sustainability of Henlius’ biosimilar franchise, which he described as “the anchor” of the company. The reason? The Chinese government recently included insulin in its national volume-based procurement (VBP) scheme, which is famous for hefty price cuts on off-patent drugs. The move raised expectations that biologics and their biosimilars will be the next targets for the program.
Zhang agreed that biosimilars will likely be included in VBP in the future and that price will go down, “but it’s really a matter of how fast and how dramatic.”
“I do believe that the decline will be much more gradual, and the degree of the declining will be much more friendly,” Zhang said of the expected biologics VBP.
The first evidence can be drawn from a recent regional VBP by a consortium of about a dozen provinces led by the populous Guangdong province. Rituxan was included in this government-led purchase, and the participating regions were estimated to account for 20% of the drug’s national market. The winning bidder offered a price reduction around 15%, Zhang said, and the impact on Henlius is “very minimal.” By comparison, insulin makers took an average 48% discount last year to win tenders in the country’s VBP.
As Zhang sees it, “there’s a fundamental difference between biosimilar drugs and other generics,” including insulins. In his view, the insulin VBP was long overdue because the diabetes drugs were half a century old, and many companies are making them.
But biologics and biosimilars represent an emerging business in China. The Chinese government needs to strike a balance between reducing healthcare costs and allowing for a reasonable profit margin for the biotech sector to grow. So the government will decide whether to cultivate biotech or to kill the goose that lays the golden egg, Zhang said. His bet is that policymakers may take a friendly position on biologics.
What’s more, the difficulties and costs involved in developing and manufacturing biosimilars are much higher than small molecules, leaving less room for price concession, Zhang said.
Perhaps more importantly, China’s biosimilar industry may simply not be fully prepared to supply for a national procurement program. Zhang raised Henlius’ Herceptin biosimilar as an example. The company launched the product about two years ago, and, as of the first half of 2022, the company is still limited by production capacity.
“We do not have enough bioreactor to produce the product,” Zhang said. “Demand is very strong.”
The first thing Zhang did when he took over the CEO job two years ago was to devise a system of how the company develops its innovative products and how it would concentrate on “high-quality assets” with differentiated profiles.
He also realized that Henlius needs to transform from a biosimilar company into an innovative company. Henlius’s pipeline currently includes drugs targeting HER2, EGFR, BRAF, VEGFR, LAG-3 and TIGIT, among others. But biosimilars will still be part of Henlius’ business.
“If we want to develop a biosimilar, we can do it,” Zhang said. “There’s no reason to abandon it, because we have the edge."
“We can be very competitive [in biosimilars], even though we may not count on it. I believe that it is still going to be one part of Henlius’ future effort, but definitely, it’s not the mainstay.”