David's New Book

Thursday, July 28, 2011

Bayer-Trius - Has the World Gone Mad?

Bayer and Trius recently announced their collaboration on the development and commercialization of Trius’ antibiotic, torezolid, currently in Phase III trials. Under the agreement, Bayer will commercialize torezolid in China, Japan and all other countries in Asia, Africa, Latin America and the Middle East, excluding North and South Korea. For these rights, Bayer is paying $25 million up front plus 25% of the total development costs. Milestones could add another $69 million to Bayer’s bill – but the specifics of this were not disclosed.

There are several fascinating aspects of this deal.  (1) Bayer is focused on Asia and other emerging markets.  They are leaving the stagnating US and European markets to Trius or other partners. (2) Bayer itself, with this deal, is putting its foot back into the antibiotics field after having spun off their entire research and development group and several products in 2006.  Like Sanofi, they have clearly lost substantial internal expertise and their ability to fully evaluate external opportunities in this area is probably much more limited than in the past. Nevertheless – they have put their toe back in the water. (3) Bayer may recognize that pneumonia will be an important indication in their market segment, but that it will be unavailable in the US unless the FDA changes quickly.

Overall, in my non-business person view, this is a good deal for Bayer.  Their investment is rather small for a phase III product and is even rather small for the market segment they are targeting.  It may also be a win for Trius helping to get the remainder of their phase III program financed and off the ground. From the scientific point of view, I think there may be room to question Bayer’s judgment here – but their risk is relatively small for a potentially large gain.

This deal emphasizes as much as anything else the fact that the US is approaching irrelevance in the minds of many in the pharmaceutical business who are interested in developing and commercializing new and needed products. This irrelevance, as noted in previous blogs, comes from the inability to develop antibiotics for approval in the US in a number of key indications like pneumonia, plus the stagnation of the US antibiotic market overall.

The Bayer-Trius collaboration also emphasizes another driver for antibiotic development – that of hope.  There is hope that, given the medical need globally, and given the rapidly emerging economies, that commercially viable products can be delivered in spite of, and if necessary without, the US.  There is also the hope (slim though it might be) that the FDA will see the light someday soon.  From my mouth to God’s ears!

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