Epirus Biopharmaceuticals Inc (NASDAQ:EPRS): Down, But Perhaps Not Out

The biosimilar space is poised to become the next billion-dollar subsector of healthcare, and a host of companies are pushing to pick up a piece of the action. Epirus Biopharmaceuticals Inc (NASDAQ:EPRS) is one such company. It's had a rough few months, however, and currently trades at a 90% discount to its April highs.With a leadership reshuffle and a pivot in corporate focus in May, is Epirus now at the turnaround point and – in turn – heading for a recovery? Perhaps.For those not familiar with the company, it’s a microcap biotech with (as of May) a focus on biosimilars in the rare disease space. Biosimilars are a type of drug similar in concept to generic drugs, in that they are designed and developed as a cheaper alternative to a branded drug, once the latter has come off patent. Unlike generics, however, they are not identical in composition to the drugs they reference. Generic drugs copy chemical drugs. Chemical drugs (things like aspirin, oxycodone etc.) are small compounds and are created 100% synthetically. This makes them easy to copy. Biosimilars copy biologics, which are far bigger in size and – due to the fact that they are derived from living cells – almost impossible to copy identically. What companies like Epirus are trying to do, therefore, is develop a drug that is as close as possible in composition to the reference drug, and then prove that it has the same impact on patients.Epirus' two lead candidates are BOW070 (tocilizumab, reference biologic Actemra) and BOW080 (eculizumab, reference biologic Soliris). The combined sales estimate for the two reference biologics is just shy of $6 billion annually by 2020, so there's a lot of market to go at if the company can pick up the relevant regulatory approvals.So why the decline over the last three months? Well, it pretty much came in one fell swoop, as the company announced the resignation of its CEO, and a shift in focus to solely develop biosimilar rare disease indications, as part of the same press release. This focus led to the suspension of the then-lead program, BOW015, and essentially delayed any chance of commercialization for a drug by at least 24 months. The company claimed the suspension is cost driven, not related to the drug's chances of approval. How much truth there is in this remains to be seen. It seems a little odd to halt a phase III just so you can use the money saved to fund a junior candidate, but it's not totally unheard of.There was no real reason given as to why Amit Munshi, then CEO, stepped down, but he essentially severed all ties with the company immediately as of the announcement, and so while there's nothing concrete to suggest it wasn’t amicable, there's every chance someone disagreed with something at some point, and the pivot to focus solely on the two above mentioned leads could well be that something.That said, the pivot allows the company, now led by Michael Wyland, to trim its costs and streamline its operations towards a focused target of approval for the two leads. The development programs for each are going to serve up near term catalysts, and that's what we are looking out for going forward. As is most often the case in dev stage biotech, capital issues are the primary risk. The company is spending around $10 million a quarter on R&D, and about half that again for general and admin. Revenues of $800K first quarter don't even make a dent in the costs, so dilutive financing will likely come thick and fast as Epirus pushes forward towards commercialization.Stick with us for EPRS updates by subscribing to our newsletter using the box below.Disclosure: We have no position in EPRS and have not been compensated for this article.