Munich – Formycon AG, the German biosimilars company which in December 2013 licensed out its first product candidate to Santo Holding GmbH, has reported positive financial results in line with expectations. For the first nine months of 2014, the company posted revenues of EUR 8.98 million (2013: EUR 0.33 million). Its operating profitability likewise improved markedly, with EBITDA of EUR 2.64 million for the period from January through the end of September. In the same period last year, the company had posted an EBITDA loss of EUR 4.33 million.
In terms of net income, the company earned EUR 1.81 million for the first nine months. During the same period in 2013, the company had reported a loss of EUR 5.16 million. Formycon has, moreover, confirmed its expectation for ending the fiscal year with positive EBITDA. The company’s total liquidity (including credit balances with banks, cash, checks and marketable securities) as of the end of September was EUR 10.44 million, compared to EUR 3.11 million at the same time last year.
Operational work continues as planned on the company’s three currently pending biosimilar projects, with each project advancing in line with its respective development schedule. As a developer of biosimilar drugs, Formycon is benefiting from the explosion of interest from the pharmaceutical industry in the so-called “third wave” of biosimilars, biotech drugs which replicate existing biopharmaceuticals, and is thus in discussions with a number of pharmaceutical corporations and generic drug producers about further development projects.
Background: What are biosimilars?
Since their introduction in the 1980s, biopharmaceuticals have revolutionized the treatment of diseases such as cancer, diabetes, rheumatoid arthritis and multiple sclerosis. In the coming years, many of the patents for these biotech drugs will expire – and by the year 2020, medications with revenues of more than USD 100 billion will lose their patent protection. In this way, it will become possible to launch new competing drugs, known as “biosimilars”. While the global market for these new-generation drugs is currently some USD 2.5 billion, industry experts expect this figure to grow tenfold by the year 2020. In contrast to traditional generic drugs, the development and production of biosimilars is highly complex and requires specialized expertise.
by Formycon AG
Munich – The first half of 2014 has been marked by the expansion of the company’s research and development activities. The company has started with the development of a third product, which, like the two previous products, is intended to mimic a biopharmaceutical active ingredient of the third wave of biosimilars. The company has also already licensed a biosimilar candidate out to Santo Holding GmbH and is currently in discussions with national and international pharmaceutical and generics companies about licensing out further product candidates.
In the first half of 2014, Formycon AG recorded a turnover of 7.4 million euros (2013: 0.2 million euros). This increase is substantially due to the high revenues achieved as a result of the above mentioned licence agreement and the resulting development alliance. The company’s EBITDA amounted to 3.2 million euros in the first half of 2014 (first half of 2013: -3.0 million euros). Overall, the company expects to achieve positive EBITDA for the business year 2014. The company’s liquid assets, comprising cash on hand, bank credit balances and financial securities, amounted to 11.2 million euros at the end of June 2014.
Munich – Formycon, the independent biosimilar development company, today announced that the development of its third product has now commenced, which like its first two products aims to replicate an established biopharmaceutical drug. These products will be part of the so-called “third wave” of biosimilars, referring to the major, multi-billion-dollar blockbuster drugs created through biotechnology for indications in the areas of ophthalmology, autoimmune disease, and metabolic and blood clotting disorders for which patent protection will expire beginning in 2020. According to information from FirstWord Pharma, a respected provider of industry information, many of the biosimilar development teams within the major pharmaceutical groups are still concentrating their efforts on the first and second waves of biosimilars, where there is strong competition. Formycon, in contrast, has been able to position itself as the clear global leader within the highly lucrative market for biosimilar drugs for patents expiring starting in 2020.
Formycon sees a strong validation of its positioning, in particular, through recent remarks made by Teva, the world’s largest generics producer, whose top management has, in speaking to analysts, expressed its strong interest in this third wave of biosimilars. In the view of FirstWord Pharma, the remarks point to a shift in paradigm affecting the entire industry, as the firm writes in a recent report: “Teva is one of the first companies to openly discuss biosimilar opportunities beyond 2020, but due to limited opportunity within the current crop of biosimilar targets, it certainly won’t be the last.” There is, according to the report, broad agreement among all of the surveyed experts that it is, in view of the development lead times, far too late for investments into the second wave of biosimilars, and that companies need to focusing on biopharmaceuticals for which patents will be expiring in the year 2020 or beyond.
“The development of biosimilar drugs, and the building of a product portfolio therefrom, for the period starting in 2020 is precisely the business model of Formycon. We are gratified to hear that the market leader in generics has likewise put this ‘Agenda 2020’ for biosimilars on its radar. It demonstrates that the work we are doing is very closely aligned to market needs, and it validates the strategic direction that we put into place already one and a half years ago. Since the start of 2013, we have been working on the most significant biosimilar products of the third wave, enabling us to gain a significant head start. We see further confirmation of this in the strong interest in our product developments,” explains Dr. Carsten Brockmeyer, CEO of Formycon AG.
Formycon AG has already licensed out the first of the third-wave biosimilar candidates which it has developed to Santo Holding GmbH (Bioeq GmbH) and is currently in discussions for the out-licensing of further product candidates.
Munich – Formycon reports solid performance in fiscal year 2013 and a strong start in first quarter of 2014. For the first quarter of this year, Formycon AG has reported strong top-line and bottom-line growth, with revenue of EUR 5.832.904 compared to EUR 7.886 in the prior-year period. Earnings before interest, tax, depreciation and amortization (EBITDA) for the period were EUR 4.246 million, a dramatic gain from the EBITDA loss of EUR 1.558 million reported in the first quarter of 2013. Net income after tax for the first three months of this year was EUR 3.972 million, compared to a net loss of EUR 1.837 million in the prior-year quarter. On 31 March 2014, cash and securities amounted to approximately EUR 14 million.
The strong financial performance for the first quarter was mainly attributable to a downpayment from the successful out-licensing of its first biosimilar drug product, which Formycon will develop to enter clinical trials in the middle of 2015, as well as other development work for clients on a service-provider basis. The first biosimilar product will be developed by Formycon up to registration whereby the licensee, Santo Holding GmbH, will bear the full costs for the development and will be responsible for marketing and commercialization. The development of the company’s second biosimilar drug candidate is likewise proceeding according to plan. Originally planned for out-licensing in 2015, this product could be partnered already as early as the second half of 2014. Formycon is currently working to further expand the development pipeline of its biosimilar products.
Fiscal year 2013, which ended in line with plan, was marked by steady progress in the development of the company’s first two biosimilar drugs. The expenditures for these significantly exceeded revenues, leading to a tentative loss before tax of EUR 7.766 million and a net loss of EUR 7.767 million, compared to a loss of EUR 2.395 million in the previous fiscal year. The full-year loss per share for 2013 was thus EUR 0.90, compared to a per-share loss of EUR 0.47 in the previous fiscal year. Following its successful capital-raising measures in 2013, Formycon ended the year with equity capital of EUR 13.928 million, a significant increase for the year, and equal to approximately 80 percent of total assets. Formycon AG expects to end the current fiscal year 2014 with positive full-year EBITDA.
Munich – Formycon AG announces the involvement of a further partner for the first out-licensed biosimilar development project. Polpharma, a leading East European pharmaceutical manufacturer, is with immediate effect a 50 per cent licence partner in this first Formycon development project alongside Santo Holding GmbH (Andreas and Thomas Strüngmann).
Already in December 2013 and ahead of schedule, Formycon was able to successfully out-license the first biosimilar development project to Santo.
Polpharma and Santo have now entered into a joint venture for the joint development and marketing of biosimilars. The Formycon biosimilar FYB201 is being integrated into this joint venture.
“We welcome the new partner, through whom it will be possible to considerably increase the turnover potential and the market penetration of our biosimilar”, says Dr. Nicolas Combé, Chairman (CFO) of Formycon AG.
Polpharma, strong in terms of sales and marketing, is a leading manufacturer in Poland with a high profile in other East European countries. Santo Holding is well positioned in Germany, Western Europe and in the South American countries. As a result, the two groups complement each other from both a strategic and geographical point of view.
Munich – Formycon AG has expanded its Advisory Board. With Dr. Bernhard Hampl, a top pharmaceuticals manager from the US has been acquired for the advisory body.
Over the past 20 years, Dr. Bernhard Hampl was a successful CEO in large American generics companies such as EON LABS Inc. and later Sandoz US, which after fusion of the two companies became America’s second-largest manufacturer of generics. Dr. Hampl, who started his career at the German subsidiary of American Cyanamid / Lederle in Wolfratshausen near Munich, has been living in Connecticut/USA for the past 20 years and brings wide-ranging international experience to Formycon. Today, he advises companies from the field of pharmaceuticals and biotechnology as well as investment companies. For Formycon AG, which has now progressed into the advanced phases of preclinical development with its first projects and is striving for international cooperations – above all in the USA – the expertise provided by Dr. Hampl, who has a doctorate in the field of pharmaceutical chemistry, represents a very valuable addition to the competences of the Advisory Boards.
Dr. Carsten Brockmeyer, CEO of Formycon AG, said. “I’m very pleased that we were able to enlist Dr. Bernhard Hampl, a recognised expert who knows his way around the US pharmaceuticals market and who successfully built up and managed several pharmaceutical companies in the USA. His competence will be highly regarded in the Advisory Board.”
Munich – Formycon AG, with its head office in Martinsried near Munich, ended the financial year 2013 very successfully and has thus created a comfortable starting position for further positive business development. In December 2013, much earlier than planned, Formycon successfully licensed out the first development project. In addition, Dr. Carsten Brockmeyer, one of the world’s leading biosimilar experts, joined the board of directors. In November 2013, Formycon also appointed Dr. Gerhard Schaefer, former Head of Global Product and Business Development at Sandoz International, and Simon Sturge, previously Corporate Senior Vice President at Boehringer Ingelheim, to the advisory board. The company can thus count on further expertise and many years of experience.
Formycon is specialised in the development of biosimilars, the more cost-effective follow-on products of complex, biotechnologically manufactured medicines. Because ever more biotechnologically manufactured medicinal products are being authorised (+ 12-15 % per annum), the market for biosimilars is also increasing: according to estimates, the total volume in the year 2020 will be over 15 billion USD. The large pharmaceutical companies are showing a correspondingly great interest in these products. However, in contrast to the generic preparations of standard, chemically synthesised active substances, the development of biosimilars is very complex and expensive, demanding high requirements from the know-how and experience of the teams.
Formycon AG is one of the few companies in the world that have the expertise for developing biosimilars – also for highly regulated markets such as Europe, the USA and Japan – and has taken on a clear pioneering role in this innovative and demanding market. “We are concentrating specifically on the so-called third wave of biosimilars, i.e. products whose patents expire as of the year 2020,” explains Dr. Nicolas Combé, Director and CFO of Formycon AG.
Formycon currently has two projects in development. The company successfully licensed out one of them to Santo Holding GmbH in December 2013, ahead of plan. On behalf of Santo and its partners Andreas and Thomas Strüngmann, founders and former owners of the generics manufacturer HEXAL, Formycon will bring the first development project to market maturity. From this contract, Formycon is reckoning with success-based payments in the mid thousand million range, which will make it possible to realise the further development of the pipeline earlier than planned. Thanks to this contract and to a very solid investor structure, Formycon is one of the few independent companies operating in this promising market of the biosimilars. “We achieved more than expected in 2013,” said Combé. We also reached the milestones for the second development project: after conclusion of the analysis phase, we started with the development of the cell line, so that the second Formycon project is also going according to schedule. The licence options for the second Biosimilar of Formycon’s pipeline are already to be examined in the second half of the year 2014.
On the basis of the unique expertise of the scientists and management as well as the integrated development processes, Formycon is a preferred partner for large pharmaceutical companies in biosimilar development.
Twenty biosimilars have been granted marketing authorisation in the EU to date. Also in other parts of the world (e.g. Switzerland, Turkey, Malaysia, Australia, Japan, Mexico, Taiwan, Korea) several biosimilars are already on the market. In the US, new guidelines for the marketing authorisation of biosimilars are currently being formulated (FDA Draft Guidances on Biosimilars). This will further open up this large market for high-quality biosimilars, as developed by Formycon.
Munich – Formycon AG today announced the signing of an exclusive, worldwide licensing agreement with Santo Holding GmbH, owned by the well noted German pharmaceutical investors Andreas and Thomas Strüngmann, granting rights to the first biosimilar drug of Formycon’s development pipeline. Under the terms of the agreement, Santo Holding will assume responsibility and bear the costs for the development and commercialization of the Formycon biosimilar drug. Formycon will perform the entire further development of the product for Santo Holding.
Formycon will receive an immediate, single-digit million euro up-front payment and will be entitled to additional payments in the three-digit million euro range based upon the attainment of specific regulatory and sales results.
“I am delighted that we have been able to gain Santo Holding for this cooperation arrangement with Formycon. This attests to the strength of Formycon’s long-term strategic orientation as a global biosimilars development company. I would also like to take this opportunity to thank the entire team at Formycon, which has worked so hard to bring about this successful outcome,” declared Dr. Carsten Brockmeyer, CEO of Formycon AG.
“This is the first licensing agreement to emerge from Formycon’s own biosimilars development pipeline,” added Dr. Nicolas Combé, CFO of Formycon AG. “Our cooperation arrangement with Santo Holding marks yet another major step as we build Formycon into a leading company in the development of global biosimilars, an industry with enormous growth potential.”
“Biosimilars will in the future become an important treatment option for patients around the world. We are pleased that we have found in Formycon a recognized and experienced partner in biosimilars development,” said Dr. Thomas Strüngmann.
Background: What are “biosimilars”?
Since their introduction in the 1980s, biopharmaceuticals have revolutionized the treatment of diseases such as cancer, diabetes, rheumatoid arthritis and multiple sclerosis. In the coming years, many of the patents for these biopharmaceuticals will expire; by the year 2020, medications with revenues of more than USD 100 billion will lose their patent protection. In this way, it will become possible to launch follow-on products, known as “biosimilars”. In contrast to traditional generic drugs, the development and production of biosimilars is highly complex and requires specialized expertise.
Munich – Formycon AG has successfully completed a placement of its shares among international institutional investors and family offices. A total of 1,257,027 new shares were issued at a price of EUR 7.50 per share, with entitlement to participation in profits retroactively from January 1, 2013. The gross proceeds to the company of EUR 9,427,702.50 will be used to fund further product development activities. Under this transaction, the largest existing shareholders in Formycon AG exercised their subscription rights in full.
The capital raised will enable the company to drive forward with its two biosimilar product development projects according to plan. Further capital raisings are not currently anticipated for the foreseeable future. The company’s registered capital (Grundkapital), which until now has been EUR 7,369,656.00 divided among 7,369,656 bearer shares without par value but with an imputed nominal value of EUR 1.00 per share, is herewith increased to EUR 8,626,683.00. The transaction was arranged by Bankhaus Neelmeyer AG, a private bank based in Bremen; by Wolfgang Steubing AG, a securities trading bank based in Frankfurt; by Dr. Heinfried Brunsmann, a German certified public accountant; and by Neef Legal, a law firm based in Berlin.
Munich – Both members of the newly implemented Advisory Board are very experienced senior healthcare executives who have contributed during their long careers substantially to the development of the global generic pharmaceutical and biopharmaceutical industry.
The Advisory Board will advise Formycon’s Executive Management Board and the Supervisory Board on strategic issues, operational aspects and growth opportunities related to Formycon’s business activities.
Gerhard Schaefer is German Citizen and graduated with a Ph.D. in Chemistry from Stuttgart University. During his more than 30 years in the generic pharmaceutical industry, he held increasing senior management positions in development, quality assurance / control and business development at Azupharma, Knoll, Stada, HEXAL and Sandoz. Among his numerous responsibilities, he was appointed to Head of Development and Business Development at HEXAL in 2001 and at the same time became Member of the Board of Executive Directors of HEXAL AG. Since the acquisition of HEXAL AG by Novartis / Sandoz in 2005 and until February 2012, he was Managing Director at Sandoz International and Head of Global Product Development and Global Business Development at Sandoz, the second largest generic pharmaceutical company, where he was managing eleven development centers worldwide.
Simon Sturge is citizen of the United Kingdom and holds a degree in Biology from Sussex University. He has over 30 years of experience in the pharmaceutical and biotech industries. Until recently, he was Corporate Senior Vice President of Biopharmaceuticals at Boehringer Ingelheim (BI), a top-20 pharmaceutical company, and among the world largest biopharmaceutical enterprises. At BI he was responsible for the biopharmaceutical business unit which has approximately 2,200 employees. From 2008-2010 he was Chief Executive of OctoPlus, a Dutch-based listed biopharmaceutical company. In 1997 he founded RiboTargets, which in 2003 reversed into British Biotech, where he was also Chief Executive Officer. British Biotech was renamed Vernalis and he remained Chief Executive until 2008. Prior to this Simon Sturge was at Celltech for 10 years where he was also on the Celltech Group Board, before he became Chief Executive Officer at Lonza Biologics.
Formycon’s CFO Nicolas Combé said: “I would like to welcome Mr. Schaefer and Mr. Sturge to our Advisory Board. The Board will play an important role in our plans to create a world-class organization in biopharmaceutical and biosimilar development and commerzialization”.
Formycon’s CEO Carsten Brockmeyer said: “I am excited about these excellent appointments. Mr. Schaefer and Mr. Sturge will bring a breadth of experience to the company. Their expertise in a wide range of fields will be invaluable in driving forward Formycon’s business objectives”.
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