Biotechies Need to Get Serious About Antibiotics, Where There is Money to Be Made

4/4/11Follow @xconomy

There are lots of exceptions to the rules in the biotech business, and a big one jumped out me this past week, related to antibiotics.

One day, Reuters ran a story about the overall abysmal state of the world’s pipeline of new antibiotics. Next day, there were reports about how San Diego-based Optimer Pharmaceuticals appears poised to sail through a meeting scheduled for tomorrow of an FDA advisory panel that will size up the merits of its new antibiotic.

Having followed a number of antibiotics developers for the past few years, it strikes me there is no shortage of ideas for fighting dangerous bacterial infections. There are interesting companies all over the map: South San Francisco companies like Achaogen and Theravance (NASDAQ: THRX); Watertown, MA-based Tetraphase Pharmaceuticals and Lexington, MA-based Cubist Pharmaceuticals (NASDAQ: CBST); New Haven, CT-based Rib-X Pharmaceuticals; and a pair of San Diego companies, Trius Therapeutics (NASDAQ: TSRX) and Optimer (NASDAQ: OPTR).

There is government funding available to support this work—Achaogen alone has raked in $155 million in support from government and philanthropic support, not to mention $95 million from venture capitalists. The drugs themselves often perform relatively consistently from early-stage to late-stage studies. And when they work, they can make sizable amounts of money—see Pfizer’s linezolid (Zyvox), which generated $1.18 billion in worldwide sales last year.

Yes, there has been some shifting of regulatory standards at the FDA, which put a crimp in many antibiotic business plans over the past year. But given all the forces properly aligned to support antibiotics, this shouldn’t be a classic case of market failure. And yet here we are, with only five new antibiotics approved by the FDA from 2003 through 2007, as Andy Pollack reported in the New York Times in November. FDA commissioner Margaret Hamburg has said the number of new antibiotics in development is “distressingly low.” Only five of the 13 biggest Big Pharma companies work on antibiotics now, which partly reflects their enduring fixation on blockbusters that can move the financial needle at their overly bloated organizations (but that’s another story, covered here last week.)

The lack of innovation in the antibiotics field is worrisome. Public health officials fret that because of the overuse of the antibiotics on the market today, we are encouraging the rise of more drug-resistant “superbugs” like the sometimes deadly MRSA and C.difficile. More, undoubtedly, will evolve in the future.

This is really just a hunch, but I would argue that a big part of the problem here is an overall lack of will in the biotech industry to create new antibiotics. While everybody talks about the hot new breast cancer drugs or the new thing for diabetes—which are sort of like biotech’s versions of the iPad and iPhone in terms of glamour—the only people who seem really interested in antibiotics are the people at those companies mentioned above. There have been some painful regulatory … Next Page »

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  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    Here’s one antibiotic startup worth mentioning that I forgot to list above—South SF-based AvidBiotics.

    http://www.xconomy.com/san-francisco/2010/09/21/avidbiotics-creates-novel-proteins-that-kill-bacteria-on-the-farm-in-the-lab-in-the-body/

  • http://www.BiotechStockResearch.com David Miller

    There’s also Radnor, PA’s PolyMedix (PYMX).

    http://www.polymedix.com/novel_antibiotic.php

  • Ted

    There is a big problem for companies developing antibiotics: Public health practitioners want to limit the use of novel, effective new drugs to the subset of patients faced with resistant infections. There are very obvious reasons for this, unfortunately, they are simply at odds with the pharmaceutical profit motive.

    This is actually a very rare case where I believe an extension in patent coverage would serve the public good. Because new antibiotics are typically held back from use as “front line therapy” there is a much longer financial path before breaking even. This is pretty unique to the antibiotics arena (after all, no one really wants to “save” new oncology drugs for metastatic cases…).

    -t

  • Joshua

    The indefatigable Megan McArdle gave a good talk for this for the Kauffman economic forum, talking about ways the incentives are designed in a way which produces those superbugs due to the nature of patents, profits and differing drug markets.

    http://bcove.me/7clj8tfa

    I found it interesting.

  • http://www.antabio.com Marc Lemonnier

    Here is another one you forgot to mention :)
    Labege France-based ANTABIO; http://www.antabio.com
    Great article BTW.

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