CEO Conversations Installment VIII: Dr. Ko-Chung Lin, Founder & CEO, PharmaEssentia (6446 TT), Part II
Ropeginterferon alfa-2b global sales have the potential to reach US$3bn long-term
As Dr. Lin and I sit in PharmaEssentia’s understated conference room, he begins to speak with an earnestness in his voice and a determined look in his eyes. He has worked two decades to build a company that will cement Taiwan’s position within the global biopharma space. With that goal getting ever closer, his resolve has become even more intense. He leans in, and says to me, “In our first conversation, we focused on Ropeginterferon alfa-2b’s applications and its near-term prospects, as well as my vision for the Taiwan Biotech industry. Today, I want to tell you about our plans to build our own distribution network in the US, and my long-term vision for PharmaEssentia. We have high expectations for our US business both over the mid and long term. Our US marketing team has impeccable credentials within the US biotech industry, and we are very well-prepared to launch Ropeginterferon alfa-2b nationwide. We have raised a total of US$146mn in the past 10 months with the dual purposes of driving introduction of the drug into the US market and of expanding its applications through research and new trials.”
Phase III Trials for Essential Thrombocytosis are Underway in Multiple Countries
Pointing at an image of PharmaEssentia’s product introduction timeline, KC says, “Ropeginterferon alfa-2b has already been approved in the EU and Taiwan, for the treatment of polycythemia vera, an early-stage form of leukemia. Our next big step will be to launch the product in the US in March 2021. We have also initiated the Phase III trial for the next target indication of Ropeginterferon alfa-2b: essential thrombocytosis. We target a global launch for this indication and expect that it will double the market potential of the drug. It should take 2-3 years to complete the clinical trials, then gain approval in multiple countries and complete the launch. This is a costly process, but we are fortunate to have sufficient funds in our war chest.”
“PharmaEssentia just won the Go-Global award at the 2020 Taipei Biotech Awards,” says KC with excitement, “We are grateful that the judges recognized how rock solid our preparations have been, as we push forward to establish Ropeginterferon alfa-2b as a global first-line treatment. To me, this indicates that the industry is increasingly aware of the importance of vertical integration into global distribution capabilities for emerging biotech companies with innovative drugs. A good example of this is Beigene, based in Beijing China, which received approval for their drug zanubrutinib in the US, then conducted the marketing effort themselves very successfully. In this initial stage of our penetration of the US market, PharmaEssentia will limit our staff to no more than 100. Even so, we target US$1bn in revenue within 5 years.
Using Incyte’s experience as a guide, the future for Pharmaessentia could be very bright
“When we gained approval for Ropeginterferon alfa-2b in the EU, investors had a hard time understanding the magnitude of the opportunity,” says KC. “It took us a long time to figure out how to properly describe the market potential. Fortunately, there is an excellent example of a company producing a similar drug in the US. Incyte (Ticker: INCY) focuses on MPN treatments, and has been very successful. Their key asset is Ruxolitinib, which has global sales close to US$ 3bn and accounts for over 90% of Incyte’s total revenue. It is the first line treatment for myelofibrosis and a second line treatment for polycythemia vera. Like PharmaEssentia, Incyte has chosen to market and sell the drug through their own proprietary channel in the US. Outside the US, they have licensed it to Novartis.”
To illustrate his point, KC continues, “The market cap of Incyte is US$ 20bn, and PharmaEssentia is a small company in comparison. However, Incyte’s market cap was US$ 1.6bn back when the first indication of Ruxolitinib was approved in the US, while our market cap was US$ 1.3bn when the first indication of Ropeginterferon alfa-2b was approved in EU.
KC pauses, then looks straight into my eyes, to make sure I’m paying attention, “However, there is a very big difference between Ruxolitinib and Ropeginterferon! The patient count for Ropeginterferon alfa-2b’s first indication of polycythemia vera is 10x that of Ruxolitinib’s first indication of myelofibrosis.”
“Other investors,” says KC, “have wondered whether a company our size can build an effective marketing and sales platform in the US. Here again, the example of ruxolitinib is instructive. When it was first launched, Incyte had only 200-300 employees. They were very successful in marketing the drug, and their employee count has grown as drug sales have increased.”
“Another instructive example is Biogen’s (Ticker: BIIB) first drug – Avonex. Biogen’s employee count was similar to that of Incyte when Avogen was launched. Now Biogen is one of the five largest biotech companies in the US.”
“This is why,” says KC, “we see such high potential for Ropeginterferon alfa-2b. Our mid-term target for global sales is US$1bn, and we think there is strong potential for that figure to reach US$ 3bn over the long-term. Later on, we will have other indications to apply Ropeginterferon alfa-2b to and also other products to continue this growth momentum. Looking further into the future, PharmaEssentia will have the knowledge base and, hopefully, the financial resources to acquire good drug candidates, or to make acquisitions when the timing is right. For biotech companies that possess both an experienced and talented staff and a vertically integrated business model, the opportunity is virtually unlimited.”
US team built with Tier 1 personnel, abundant experience
PharmaEssentia has prepared well for its entry into the US market, says KC, “The general manager of the US operation is a Chicago Booth graduate, with several years of experience at as a product strategy specialist at top US pharmaceutical companies. She has been responsible for multi-billion dollar product lines and once successfully achieved US$1bn in sales for a new drug asset within 8 months. The team has knowledge of the most cutting edge developments in MPN treatment, as well as deep connections with key opinion leaders and treatment centers. I strongly believe that this team will find the best methods and the proper channels to sell Ropeginterferon alfa-2b.”
Though PharmaEssentia has decided to keep the US marketing rights for Ropeginterferon alfa-2b, that doesn’t mean they will to do everything themselves. Says KC, “We will collaborate with local partners and leverage their local resources. The core team will set the target and monitor the performance of local distributors. This way, we can maximize the value of the product; and develop long-term relationships with local channels and physicians. We expect these efforts will have a long-term payoff. Once we successfully develop new indications for Ropeginterferon alfa-2b or the next generation of the drug, the channel will be in place. So, while there is an upfront investment now, we believe that PharmaEssentia and its shareholders will benefit from enhanced returns and greater market upside over the long run.”
Completing the process of going global – entry into Asia
Ropeginterferon alfa-2b has already been approved in the EU and Taiwan. As of now, Taiwanese patients can pay for the drug out-of-pocket, and management expects it to be covered by Taiwan’s National Healthcare Insurance program in 2021. Regarding the drug’s potential to go global, KC proudly says, “We are quite certain that US approval will be obtained 1Q21. We are working on getting it approved in Korea, Japan and China as well. Korea’s process is similar to Taiwan’s. Ropeginterferon alfa-2b has already been granted the orphan designation in Korea, and we are now applying for clinical approval, which we expect can be achieved as early as 1Q21. A bridge study is in progress in Japan with approval likely in mid-2022; and we are currently negotiating with the Chinese regulatory authorities for market entry. We are hopeful it can occur not too long after approval of Ropeginterferon alfa-2b in Japan.”
In addition to marketing Ropeginterferon alfa-2b in China, Pharmaessentia intends to leverage its core competency in new drug development to develop products specific to China’s large domestic market. “We will set down deep roots in China, and use collaboration to speed up market development.”
Global trials for Ropeginterferon alfa-2b’s second indication are proceeding in sync
Having had the experience of taking Ropeginterferon alfa-2b global for PV indications, PharmaEssentia has been much more aggressive in planning its rollout for the drug’s second indication, says KC, “The second indication of Ropeginterferon alfa-2b is essential thrombocytosis; we are launching a multinational, multicenter phase III trial. So the approval schedule will be more concentrated than PV, and we can leverage the existing channels built for PV to accelerate market acceptance.”
Combining its scientific drug development core competency with a vertically integrated model, PharmaEssentia aims to become a bellweather biotech player in the Greater China region
Thinking about the strong support PharmaEssentia has enjoyed from its founding investors and from the capital markets, KC smiles and says, “Over the past 17 years, PharmaEssentia has built strong capabilities in science, drug development and GMP manufacturing. We were the first company in Taiwan to develop a globally-approved first-line drug, and our drug is the only first line drug approved for that indication. This is a noteworthy accomplishment, and we are deeply grateful to our shareholders and business partners for helping us get to this point.
The Size of the Global Opportunity and PharmaEssentia’s Long-Term Roadmap
We asked Dr. Lin how large the global market for Ropeginterferon alfa-2b’s initial indications might be in terms of patient numbers. He answered, “If we look at only the US, there are 300,00 to 350,000 patients for the three major MPN diseases combined. Most of these people suffer from polycythemia vera and essential thrombocytosis. But, if we consider the global market, the number is several times that. We are very confident that we can lead a paradigm shift in current polycythemia vera treatment. As for essential thrombocytosis, no drugs have gained the approval to go ahead with a Phase III trial in the past 20 years. Yet, the FDA just approved our phase III protocol for essential thrombocytosis without requiring a phase II trial. This is a tremendous achievement which makes PharmaEssentia the clear market leader in this space.”
“In terms of product development, we will expand Ropeginterferon alfa-2b’s indications from polycythemia vera, to essential thrombocytosis followed by primary myelofibrosis (PMF). Secondly, we will develop combination therapies for Ropeginterferon alfa-2b and immunotherapy to fight cancer. Thirdly, our team will leverage our strength in PEGylation to optimize some existing drugs. For example: PEG-EPO, PEG-GCSF, PEG-Growth Hormone, and other PEG-Cytokines. So far, only a handful of companies have been able to push human-use pegylated drugs through the approval process and into the market. We succeeded in doing so with Ropeginterferon alfa-2b and will continue to do so with other drugs to develop products that can improve quality of life for patients suffering from chronic and invasive diseases.”
“I have set 3 clear goals for this company,” says KC, “First, we will develop a strong marketing team and channel in the US, Japan, Korea, China and other key markets, shaping PharmaEssentia into a fully integrated biopharma company. Second, we aim to become the leading player in the MPN space. Third, Ropeginterferon alfa-2b is the most advanced interferon to date, and has vast opportunities ahead of it for treatment of a wide variety of indications, whether it be for use as a single agent or in combination with other drugs. So, we aim to maximize the application of this drug in the market, expanding its applications in oncology and infectious diseases. Our entire team is very excited at what lies ahead for PharmaEssentia in the next 2-3 years, and we believe the future is bright.”
More about PharmaEssentia:
CEO Conversations Installment VII: Dr. Ko-Chung Lin, Founder & CEO, PharmaEssentia (6446 TT), Part I
CEO Conversations XXV: Ms. Meredith Manning, General Manager, PharmaEssentia (6446 TT) US subsidiary
If you would like to arrange a meeting with Dr. Ko-Chung Lin, please contact yvonnehuang@qtumic.com