AZ's New Business Unit

Buried in a press release (you have to download the press release from this link)  dedicated to AZ’s progress on multiple fronts is the most astounding piece of news to come out of big pharma in the last 50 years!  AZ will take what is left of its infectious diseases franchise (after the Entasis spin-out) and create a separate business unit with its own profit and loss sheet within AZ.  This is very much the way many large pharma companies handle their vaccine units. What this means in practical terms is that the infectious diseases unit (now entirely clinical development and marketing) can divest, spend money, license and purchase assets as long as they can live within their budget as defined by sales of their products.  Those products right now are Merrem, Zinforo and soon to be ceftazidime-avibactam (including royalties from North American sales by Actavis).  This is a pretty good package with a great deal of upside. (What is bizarre is that this income could have also supported the research that was just spun out as Entasis.  What was that all about)? 

GSK has a structure that is similar in that their centers of excellence in drug discovery are self-contained units designed to take products through phase II clinical development.  These units have all of the support functions within them to allow this to happen such that the units are not dependent on the mother ship for these functions. But – they are not separate business units.  For certain support activities (those that might be expensive) and to progress beyond phase II, the corporate powers that be must approve and even take over. I have criticized this in the past as being only a half-measure (see my book).

I am totally excited by AZ’s plan since it is something I have pushed since my days at Wyeth. This is something I have discussed in this blog and in my book.  It goes well beyond the GSK structure and is a win-win approach.  It allows the company to keep its focus on other areas that appear to be of higher priority for them (for reasons that continue to escape me).  At the same time, the infectious disease development group has the freedom to expand and contract as their own strategic needs dictate.  As long as the mother ship leaves the infectious disease hands on the control stick, this should allow us all to have a more clear path to the antibiotics we need while allowing AZ to focus on its other businesses.

The issue for the AZ Infection business unit will be how it will derive its support functions.  In particular, marketing will be an issue.  They will probably have to, at least at first, rent AZ’s current sales force.  On the other hand, as a totally separate business unit, they should have the freedom to pick and choose contractors for various critical activities such as manufacturing, formulation development, toxicology, and even, eventually, sales.   My experience from the biotech side is that these are frequently done as well and more cheaply by outside contractors as opposed to the stodgy and conservative groups within big pharma.

Sometimes, something really good can come out of a terrible situation. I hope for all of our sakes that this is an example of such an outcome.  After all of their contortions trying to rid themselves of their excellent infectious disease research and development group, AZ may have finally landed on the right solution.

The Wellcome Trust and Diagnostics

I had the honor and pleasure of attending a Wellcome Trust meeting for the last few days looking at the medical need and potential utility of approaches to the rapid diagnosis of bacterial infection.  The Trust gathered a very diverse group of experts ranging from patient advocates to general practice physicians to emergency room physicians to infectious disease specialists. The general question was – could rapid diagnostic technologies be useful in the more rational and appropriate treatment of patients with various infections.  I think the general hypothesis was – if we can provide a specific and reliable rapid diagnosis, we might be able to decrease the empiric use of broad-spectrum antibiotics or at least de-escalate to more specific therapy more quickly.

The first question that was posed was – what diagnostics do we need? One fascinating and eye-opening observation (for me) was a clear consensus that we need a rapid and reliable approach, probably focusing on the host response, to distinguish bacterial from viral infection or even between colonization and infection. The idea here would be to document that an antibiotic is not needed and prevent unnecessary therapy.  For most participants it was clear that for relatively mild or self limited infections – e.g. sinusitis – we probably do not need such tools.  The idea here is that most infections are viral and even those that are caused by bacteria, for the most part, seem to go away without therapy.  Obviously, the question of whether treatment could actually shorten the disease if only we could determine who to treat remains open.  But the consensus was that this was not the place where we should invest our diagnostic development efforts.

We then explored hospital-acquired pneumonia and ventilator-associated pneumonia (HAP, VAP).  There was universal disbelief, condemnation or scorn for the current US approach to the reporting of VAP using the new CDC criteria.  In the CDC approach, the diagnosis requires bronchoscopy and many centers, like the one where I work, do not routinely do this procedure to make the diagnosis.  Therefore, we will never report a single case. In addition, there is an active disincentive to make the diagnosis given the potential for loss of reimbursement by payers. But VAP was an infection where the consensus was that, again, some measure of whether the patient was actually infected using host-response measures combined with a rapid bacterial diagnostic directly on respiratory secretions would be useful to guide initial therapy.  Or, if it could not be rapid enough for a very sick patent, such a diagnostic could guide de-escalation over the ensuing 24 hours or so.

A side discussion emphasized the difficulty in carrying out trials in VAP.  There was the suggestion that the current approach using non-inferiority is becoming infeasible and that new trial designs are desperately needed.

HAP was a completely different story, though. Here, the major problem was that, like community-acquired pneumonia, adequate specimens to be used for a bacteriological diagnosis are only very rarely obtained – the estimate was that such a specimen was available in only ~ 5% of cases. Therefore, a rapid diagnosis of bacterial etiology could also not be performed.  We did agree that again, some sort of test looking at host response might be helpful to reassure us that at least the patient in question had an actual bacterial infection.

Perhaps the most straightforward question we tackled was complicated urinary tract infection.  But even here, some measure of local urinary tract inflammatory response was deemed to be potentially useful to help sort out whether the bacteria and white cells in the urine of a catheterized (or even not catheterized) elderly patient with non-specific symptoms actually represent infection vs. colonization. Once this was established, then a rapid bacterial diagnosis including an indication of susceptibility was considered to be very useful in guiding initial therapy.

So the surprise, and perhaps I should not be surprised, was the importance placed on the potential utility of using the host response to distinguish bacterial infection from either colonization or from viral infection. But, to my knowledge, this would still require vast amounts of research to discover such biomarkers and validate them in various clinical settings. So, our greatest desire is for something that will not exist for years to come.  The utility, and even the potential utility, of rapid diagnostics for limiting empiric therapy remains elusive for many infections treated in hospital.

The Birth of Entasis

Last week, Entasis announced its birth as the spin-off from AstraZeneca’s antibiotics research group came to fruition. The officers of the company include Manos Perros as CEO, Michael Fitzgerald as CFO, Ruben Tomassi and John Mueller running the science and Chris White as Chief Business Officer. For now, Entasis is ensconced within the AZ facility in Waltham, but the company plans to move out after a period of time.

While AstraZeneca has provided the entire $40 million in funding for the nascent company, it retains no rights of any sort to any of the compounds present or future that might be discovered or developed by the company. Contrary to what I reported in my previous blog on this topic, AZ has apparently realized that they cannot have their cake and eat it, too. AZ retains control as the only investor.  Other than Manos Perros, the other three board members are all AZ employees focused in business development and divestment.  

Entasis’ most advanced compound is ETX0914, formerly AZD0914, currently in phase II trials for uncomplicated gonorrhea including disease caused by multiply resistant strains.  Based on their website, Entasis’ discovery programs seem focused on new B-lactam antibiotics or B-lactamase inhibitors, perhaps to follow-on to AZ’s avibactam.

According to the Fierce Biotech report, of the 175 employees involved in antibiotic research in Waltham, only 21 were employed by Entasis.  Entasis management has  stated that they plan to expand their group to 30 over the next year or so.  Once again, one must wonder what has happened to all the scientists who did not go to Entasis and what implications this has for our continued ability to support antibiotic research overall.

Once again, the result of AZ’s shenanigans over the last two years is bittersweet. Clearly, AZ management does not agree with the growing evidence that antibiotics can be profitable while providing an important public health need. This misguided view of the future of antibiotics research within the pharmaceutical industry has again led to the tragedy of layoffs of talented, experienced and motivated antibiotics researchers.  At least, AZ has provided a way forward for the discovery of new antibiotics in a new and slimmed-down package.  We can only wish Entasis the best of good fortune in their future endeavors.  We also hope that the success of Entasis will show AZ how mistaken they have been.  The best way to achieve that is with a successful pipeline and an ultimate sale to a large pharma AZ competitor who, in turns, builds shareholder value off of AZ’s folly.