Formycon Halts Phase III Trial of FYB206 Following FDA Feedback, Faces Market Challenges for Biosimilars

Key Insights

• Formycon terminates Phase III "Lotus" trial for FYB206 biosimilar after FDA confirms therapeutic comparability can be demonstrated through existing melanoma study data and analytical program.
• Company anticipates significant valuation adjustments for FYB202 due to higher-than-expected price discounts in the U.S. biosimilar market, potentially requiring impairment in the high double-digit to low triple-digit million range.
• Commercialization of FYB201/CIMERLI® likely to pause temporarily due to increasing price competition among ranibizumab providers, leading to potential valuation adjustments.

Formycon AG has announced a strategic shift in its development program following positive feedback from the U.S. Food and Drug Administration (FDA). The company has decided to terminate its Phase III "Lotus" trial for biosimilar candidate FYB206, a move that could result in substantial cost savings while maintaining the program's development trajectory.

Strategic Trial Termination and Development Path

The decision to halt the Phase III trial comes after extensive scientific discussions with the FDA revealed that therapeutic comparability between FYB206 and its reference drug Keytruda® can be adequately demonstrated through alternative means. The company will leverage data from its ongoing parallel study in melanoma indication ("Dahlia"), combined with a comprehensive analytical program, to support the development and approval process.

This strategic adjustment is expected to generate significant financial benefits for Formycon, with preliminary estimates indicating potential investment savings in the high double-digit million range over the coming years. These savings are anticipated to positively impact the company's cash flow and liquidity position.

Market Challenges and Financial Implications

The biosimilar landscape in the United States is experiencing significant pricing pressures, forcing Formycon to reassess its commercial strategies. In collaboration with commercialization partner Fresenius Kabi AG, the company is preparing for the U.S. market launch of FYB202/Otulfi™. However, emerging market dynamics indicate a need for valuation adjustments due to higher-than-expected price discounts for biosimilars.

The financial impact of these market conditions is substantial, with preliminary calculations suggesting a non-cash impairment requirement ranging from high double-digit to low triple-digit millions for FYB202.

Commercialization Strategy Adjustments

The competitive pressure extends to FYB201/CIMERLI®, where increasing price discounts among ranibizumab providers have prompted discussions between Bioeq AG and Sandoz AG regarding future U.S. commercialization strategy. Current indicators suggest a likely temporary pause in the commercialization of FYB201/CIMERLI®, necessitating extraordinary adjustments to the valuation model.

The company expects these adjustments to result in a non-cash impact in the high single-digit to low double-digit million range for the 2024 financial year. In response, Bioeq AG is actively exploring alternative commercialization strategies for the U.S. market.

Financial Outlook

While Formycon maintains that key financial forecast figures for 2024 will remain largely unaffected by these adjustments, the company's net result is expected to reflect the impact of impairments related to both FYB202 and FYB201. Detailed financial implications and the forecast for the 2025 financial year are under review, with comprehensive updates expected during the final financial results announcement scheduled for March 27, 2025.