In late September, Shire gave back the development rights to biosimilar pharmaceuticals for both Humira and Enbrel. It was a move that was perhaps not unexpected following their acquisition of Baxalta in June, which had originally signed the deals with Momenta Pharmaceuticals (MNTA - Get Report) and Coherus BioSciences  (CHRS - Get Report) , respectively.

But this move hardly signals a death knell for smaller, biosimilar developers. Momenta and Coherus both offer good opportunities in this space. Below we take a closer look at the companies and other developments in the biosimilar space. Shares of Momenta fell more than 2% in Tuesday trading. Coherus dropped about a half percentage point. 

Biosimilar drugs possess properties similar to those already licensed.

Plenty of Alternatives for Momenta's Humira-Biosimilar M923

Shire's biosimilar agreement for Humira, the larger of the two drugs at approximately $14 billion in annual sales worldwide, had progressed nicely for Momenta, with a pharmacokinetic (PK) study displaying positive results late last year and data for a pivotal Phase 3 study expected later in 2016.

Humira has a number of approved indications -- Momenta's study with its M923 was in chronic plaque psoriasis -- and the company still intends to complete regulatory submissions for M923 in both the U.S. and European Union sometime next year. THAT would put a potential product launch timeframe for 2018. Despite returning the development rights, Shire still is required to fund the M923 development program for another 12 months, which is expected to bring Momenta close to the end of development -- if all goes well.

If not Shire, could Momenta find another partner for M923? Mylan would be the most likely firm, having recently signed a multi-product biosimilar development agreement with Momenta for Orencia (abatacept) plus five more products; however, Mylan also has an earlier agreement with India's Biocon for a biosimilar Humira for both US and EU markets. Likewise, for Sandoz, Momenta's partner in the complex generics sector, as Sandoz has its own clinical program (currently in Phase 3 also) for Humira.

There are a number of other players in the biosimilar Humira market, including Coherus, which has certain patent-related advantages in the U.S., but there are enough pharma and generic firms that may be interested in this biosimilar to help Momenta in the future, perhaps with marketing only. One up-and-comer in the biosimilar space is Samsung Bioepsis, part of Korea-based Samsung BioLogics, which has recently filed a massive, up to $2 billion IPO, due in November.

Coherus Remains Only Pure Play in Biosimilars

Meanwhile, Coherus, which had kept U.S. development rights for its CHS-0214 etanercept (Enbrel) biosimilar, got back rights for the therapeutic for the Europe, Canada, Brazil and Middle East markets from Shire. Coherus has partnered in Japan with Daiichi Sankyo for the biosimilar. For the time being, it may be content to go-it-alone on development of the biosimilar for Enbrel in other markets, which with $9 billion in worldwide sales ranks just behind Humira in global sales for a biologic.

Coherus is well on the path toward approval for CHS-0214, with positive clinical results already reported earlier this year in both psoriasis and Rheumatoid Arthritis. Coherus expects to file its MAA for the EU by the end of this year with a target approval and launch date as early as the latter part of 2017. Likewise, Coherus is well-advanced on its biosimilar for Humira (CHS-1420), with a BLA filing targeted for the end of 2016 and approval anticipated late in 2017; and for its Neulasta (pegfilgrastim) biosimilar, CHS-1701, with a U.S. BLA already filed in August and an MAA filing anticipated for later in 2016 and approval possible as soon as mid-2017. Coherus' additional programs, or "Wave 2", include biosimilars for Avastin and Lucentis, and its proprietary CHS-131, which is addressing the Multiple Sclerosis market.

Buy or Sell, or Pair Trade?

So what is the best way to play this new biotech space? Both firms are well positioned financially, with Momenta holding over $330 million in cash at the end of last quarter (as much as three year's operating capital), plus the 12-month financial commitment still due from Shire. For their part, Coherus has over $220 million in cash on hand after a recent equity sale and milestone payment from Shire, about two years' worth of operating cash flow at recent pace. Both companies are due to report their next quarterly financial results in early November.

Although both companies' have plenty of cash and expect positive news flow over the next six to 12 months as regulatory filings are completed and perhaps even approvals are received, share price performance for Coherus and Momenta has diverged this year. Coherus' shares have behaved well in 2016, up over 11%, solidly outperforming both general and industry indices, while Momenta's stock has languished, falling over 20% year-to-date, worse even than the iShares Nasdaq Biotech index, for example.

Thus, momentum-oriented investors may want to look hard at Coherus to take advantage of upcoming news flow. These shares still trade 30% below recent highs from just last June. Alternatively, value-oriented investors may want to consider Momenta, currently trading at only two times book value and less than three times cash, and less than one-half of share price highs, also from June 2015.

Disclosure: The author does not own shares of any of the companies mentioned in this report.