- Biogen will pay roughly $700 million to increase its stake in Korean biosimilars developer Samsung Bioepis to 49.9% from about 5%, exercising an option it secured in its original 2012 joint venture with Samsung Biologics to establish Bioepis.
- By upping its ownership, Biogen gets a greater share of revenues earned from sales of Bioepis' biosimilar products, four of which are approved in Europe. One of those, a biosimilar of the TNF inhibitor Remicade, is also OK'd and on the market in the U.S.
- But it's not clear whether Biogen will remain a partner in the joint venture over the long term. Comments made by company leadership at a recent investor conference, flagged by Mizuho analyst Salim Syed, signal the biotech might seek to trade or otherwise exit its increased ownership position down the road.
Biogen's decision to exercise its option was not unexpected. In April, company CFO Jeff Capello told analysts on an earnings call that Biogen saw the opportunity to own more of Bioepis as an "attractive value creation opportunity."
In a filing with Korean regulators, Samsung Biologics valued the Bioepis shares acquired by Biogen at just over $2 billion — providing some evidence Capello's comments weren't just spin. Bioepis is not publicly traded.
The option also expired at the end of this month, likely pushing Biogen to move ahead rather than forfeiting the opportunity.
Certainly, Biogen will see a greater share of the upside to sales of Bioepis biosimilars. Two of the copycat products, Flixabi (infliximab) and Benepali (etanercept), are currently marketed in the EU, while two others are approved but not yet launched.
Under a separate commercialization deal, Biogen sells Bioepis autoimmune biosimilar products in Europe in return for a cut of the profits. (The companies haven't publicly specified but Mizuho's Syed puts it at an even 50% split).
In the U.S., Bioepis has another commercialization deal with Merck & Co., which launched the Korean drugmaker's Remicade biosimilar under the brand name Renflexis last July.
Doing the math, Syed estimates exercising the option now gives Biogen a 25% share of profits in the U.S. (half of Bioepis' split with Merck) and 75% share of profits in Europe (50% under the commercialization deal plus half of Bioepis' 50%).
How Biogen's share of biosimilar revenues stacks up after exercising its option
|Share of EU profits from Bioepis biosimilars||52.7%||75%|
|Share of US profits from Bioepis biosimilars||2.7%||25%|
SOURCE: Salim Syed, Mizuho Securities USA LLC
Sales of Flixabi and Benepali totaled $128 million over the first three months of the year, according to figures reported by Biogen. Importantly, the companies also plan to soon launch their approved version of AbbVie's Humira (adalimumab) in Europe.
A thicket of patents block copycat competition to Humira in the U.S., but, under settlement deals with Amgen, and Biogen and Samsung Bioepis, multiple biosimilar versions of the best-selling drug look set to reach European patients by October.
With opportunities for biosimilars opening up, it's not clear exactly why Biogen would want to exit the joint venture. Comments made by company CEO Michel Vounatsos at a broker conference in May, cited by Syed, indicate Biogen doesn't see the partnership as a fit with its core neuroscience business focus.
It's worth noting, however, that even if Biogen exits the joint venture, it could preserve the commercialization deal where it markets Bioepis' three anti-TNF biosimilars in Europe.