David's New Book

Monday, January 27, 2014

Pharma's Wet Toes

In a recent business news article for the Wall Street Journal, Hester Plumridge noted that some large pharmaceutical companies are once again testing the antibiotic waters. Of course, she would have known all about this had she been reading this blog (Sanofi, Roche).  I would like to add some granularity to her article.  The first large pharmaceutical company to announce they were abandoning antibiotics research was, in fact, Roche in 1999.  Roche was followed in rapid succession by Bristol Myers Squibb, Lilly, and Wyeth.  Abbott and Bayer followed in 2003 and 2006.  Sanofi spun out their antibiotics assets into Novexel in 2004 (Novexel and its products were acquired by Astra-Zeneca and Forest in 2009). J&J and Pfizer pulled out in 2011 or so.  Novartis never formally pulled out of antibiotics research and maintains a research effort in their Emeryville site in California.  But they are a schizophrenic company with a strong and enthusiastic research group and very unenthusiastic commercial and development organizations.  So I count Novartis as de facto out.  This left us with Astra-Zeneca, GSK and Merck.  Even there, Merck’s program is small and is based on a single product (MK-7655 – B-lactamase inhibitor in phase II). 
But the trend is now going in the opposite direction.  Sanofi rapidly changed its mind and re-entered antibiotic R&D recently.  They just don’t know where they’re going yet.  They had hired Rodger Novak from Nabriva in Vienna in 2011 to run their antibacterial effort, but he left after less than two years in place.  Roche has completed two deals in the antibiotics space – one for drug discovery and one with Polyphor for its phase II ready anti-Pseudomonas drug. Whether they know exactly where they are gong yet or not is yet to be determined.  But it is not surprising that companies trying to re-enter the antibiotics arena would have problems.  Since these companies lost most or all of their expertise years ago, they will need time to build this back up and re-establish themselves.  How much time required depends on their corporate will and resources.  In this regard, those companies that got out most recently like Pfizer and J&J might expect to have the least difficulty getting back in.  In the case of J&J I believe this might be true since I know that a number of their old antibiotics R&D folks are still in place but working elsewhere in the company.  Pfizer has pretty much dismantled their team and has left so much ill will behind them, that I predict that their climb back to antibiotics, if they so decide, will be a steep one.

The resurgence of interest in antibiotics has clear origins.  There has been a complete turn around at the US FDA in terms of antibiotic development.  They are no longer hostile – in fact – I think it has become just the opposite.  They still need a few tweaks (big ones on hospital acquired pneumonia), but you can get things done at the FDA again. The EMA in Europe has been the stalwart regulatory agency throughout and remains so. The other main contributing factor is the increasing medical need caused by resistance and the possibility that this will drive higher prices in the marketplace. The convergence of rapid and efficient regulatory pathways to the market and higher prices combine to suggest that companies may once again be able to make a return on their investment in this area.

On a more pessimistic note, we are all still awaiting further developments at Astra-Zeneca who, under pressure from generic intrusions, announced that they would slow their investment in antibiotics research.  Apparently, although they believe that the regulatory piece is in place (just talk to John Rex), they are not sure that the pricing piece is ready for prime time yet (just talk to their CEO).  But if they were to back out entirely, it would be catastrophic for antibiotics R&D given their pipeline and their expertise in the area.