Biocon Biologics May See Delay In Key Launches On U.S. FDA Observations

Biocon Ltd.'s shares fell the most in five weeks after the U.S. drug regulator issued observations to its subsidiary.

“The US Food and Drug Administration conducted three onsite inspections of Biocon Biologics Ltd.'s seven manufacturing facilities spanning two sites in Bengaluru, India and one at Johor, Malaysia. These inspections started with the Bengaluru site on Aug. 11, 2022, and concluded with the Malaysia site on Aug. 30,” Biocon said in an Aug. 31 exchange filing.

At the conclusion of these inspections, the U.S. FDA has issued Form 483s with 11 observations each for the two sites in Bengaluru and six observations for the Malaysia site, the filing said.

These inspections, the drugmaker said, were triggered on account of three preapproval inspections for biosimilar Bevacizumab (for cancer), rh-Insulin and Insulin Aspart (diabetes) and a capacity expansion inspection for biosimilar Trastuzumab (stomach cancer). These included multiple drug substance and drug product facilities and other support infrastructure at these sites.

A pre-approval inspection, according to the U.S. FDA, is performed to ensure that a manufacturing establishment named in a drug application is capable of manufacturing a drug, and that submitted data are accurate and complete.

Biocon in the filing disclosed that the observations were primarily related to “the need for improving strategies for microbial control, enhancing quality oversight, augmenting the use of software applications and computerised tools to aid risk assessment and investigations and other procedural and facility upgrades”.

The company said it would submit corrective and preventive action plans to the U.S. FDA in the stipulated time frame, and doesn't expect the outcome of these inspections to impact the current supply of its products.

Biocon has declined to comment on BQ Prime's emailed queries on expected timelines for resolution of the issues, corresponding delay and new timelines for the potential launch of these products, the market potential of these launches and the loss due to delay.

Vishal Manchanda, pharma analyst at Systematix, told BQ Prime that “Insulin Aspart, which is to be launched from the company's Malaysian facility, is an important potential launch for the company in the U.S.”

The current expectation was a CY22-end launch. But with the Malaysian facility receiving fresh observations, there is a potential chance for the approval timelines getting extended, he said. That could push back the launch.

The approval for this biosimilar has seen a delay in the past on account of a complete response letter that Biocon had received from the U.S. FDA, Manchanda said.

A complete response letter indicates that the FDA has conducted a complete review of the data in product application and has subsequently found that it cannot approve the same in its present form. It lays out the reasons why a drug cannot be approved. It covers safety, efficacy, and manufacturing, while describing the deficiencies, possible remedies, and options for moving ahead.

According to Manchanda, Biocon had an early mover advantage here (Insulin Aspart) and any further delay could compress this advantage. Other players like Sandoz and Lannett are also developing Insulin Aspart; the opportunity size for which is around $1 billion (around Rs 8,000 crore) in the U.S.

Shares of Biocon fell 4%, the steepest intraday decline in five weeks, to Rs 297.55 apiece in early trade on Thursday. The stock's trading volume was more than twice the 30-day average.

Of the 21 analysts tracking the company, 13 maintain a ‘buy' and four each suggest a ‘hold' and a ‘sell', according to Bloomberg data. The 12-month consensus price target implies a 23.4% upside.