Monday, December 30, 2019

Melinta and the $2.6 billion

The widely predicted bankruptcy of Melinta has arrived. This was the result of meager sales of four antibiotics, unsustainable debt and high costs of marketing.  

Delafloxacin is an IV/oral fluoroquinolone with activity against MRSA.  But it appeared on the market at the same time as other new orally available anti-MRSA antibiotics and also had to contend with generic linezolid.  In addition, many physicians are trying to avoid using fluoroquinolones today because of their association with C. difficile infection. A number of us warned the company early on that delafloxacin was a flawed strategy. One-year sales through August = $11 million.

IV minocycline is a product widely marketed throughout the world, but that had never been marketed in the US.  Melinta saw an opportunity to market the agent in the US as a therapy for resistant Acinetobacter infection. But minocycline had few advantages over tigecycline which became generic in 2015. One-year sales through August = $11 million.

Oritavancin is an IV product for the treatment of MRSA and other Gram positive infections that can be used as single dose therapy. Of course, it had to compete with less expensive therapies and dalbavancin – another single dose IV therapy for similar infections. (I have no sales data).

Finally, Melinta marketed meropenem-vaborbactam that targeted carbapenem-resistant Gram negative infections.  But there are just not enough infections to drive this market and ceftazidime-avibactam got there first.  One-year vabomere sales = $11 million. 

Many would conclude that Melinta got what it deserved. Regardless of whether that is an accurate assessment, investors will still accelerate their abandonment of the area based on Melinta’s demise. We can look forward to other antibiotic biotech failures in the new year.  None of this is good news for antibiotics and our future. The only thing that will save us will be some kind of significant pull incentive for new and needed antibiotics. 

Now, I want to change subjects and discuss the $2.6 billion. In a recent New York Times article, I was accurately quoted as noting that the average cost of bringing a drug to market today is $2.6 billion. That number comes from a paper by Dimasi and colleagues published in 2016. I think that it is worthwhile to put that paper in perspective. To arrive at this number, the authors surveyed 10 randomly chosen pharmaceutical companies ranging in size from the top 10 to below the top 25 in terms of size (the specific companies surveyed is confidential). The survey included 106 investigational compounds of which 87 were small molecules. The costs were weighted by stage of development and then extrapolated to the entire Tufts database of over 1400 compounds in development between 1995 and 2007 globally. Of these, 103 were approved for the market. Based on all this, they then estimated the out of pocket cost for each approved compound - $1.5 billion. Then they examined the costs of capital required to finance R&D including that for failed drugs. This accounted for about $1.1 billion leading to a total of $2.6 billion in costs per drug. 

It is not clear to me that these numbers would apply to the current pipeline of antibacterial drugs since 90% or so come from biotech. The development costs of antibiotics have diminished since 2012 and the success rates seem better than those for other therapeutic areas. I would guess since development costs are lower, the capital required and therefore the cost of that capital would also be lower than the numbers cited in the Tufts study. Nevertheless, the economic challenge for these antibiotic biotechs, especially given the state of the antibiotics market, must be greater than that for other therapeutic areas. 

The next blog will explore the potential for BARDA to provide some pull incentive for antibiotics. 


  1. It is good to have Melinta's demise explained so clearly. Two very different strategies (Achaogen's and Melinta's) end with the same result. In healthy sectors, many approaches work out, but underpinning many drug sectors is interest from Big Pharma. As you have often highlighted, the retreat of Big Pharma from the antibiotics sector adds to the challenges facing antibiotic biotechs.

  2. If market size and return on dollar are important, why not focus instead on bringing new therapeutics to large markets where poor therapeutics dominate , such as those for clindamycin and metronidazole?

  3. Hi David- Nice summary and its clear that current pricing won't support the market size for many of these products. I will have more to say on in other forums at another time.

    But I must comment on your statement: "...But minocycline had few advantages over tigecycline which became generic in 2015."

    While I don't expect your blog to wax on important mechanistic differences for resistance in Acinetobacter and PK-PD/ dosage regimens for these agents, I do think there are important differences here. Simply stated at the labeling level, IV minocycline has an FDA indication for infections due to Acinetobacter (now an urgent resistance threat pathogen and where the real use of this agent should be targeted), whereas tigecycline labeling has an FDA WARNING AGAINST use of this agent against this pathogen.

    The misinformation that many newer agents are interchangeable with generic antibiotics continues to plague this field. It doesn't help policy makers, and can hurt patients.

    Let's all try to make sure we are giving a clear picture of agents that are targeting urgent resistance threats and unmet needs.

    Thanks for keeping up the good fight.

    Mike Dudley
    CEO, Qpex Biopharma

    1. Hi Mike. Thanks for your comment. Lets just say that minocycline was perceived to have few advantages over tigecycline. As an aside, I think the FDA warnings on tigecycline were an overreach based on the data. The main problem is that there are just simply not enough patients with Acinetobacter infections to support even a single antibiotic much less several.

  4. I work/worked at Melinta. It is a shame that many of the legislative improvements that will help (I won't say fix) the antibiotics market are likely to languish during an election year. Congress members do not want to be seen helping the pharma industry right now.

  5. I would really like a window into the thinking of the management teams of Achaogena and Melinta. Instead of admitting that their plans to get to enough sales were futile, they continued to maintain sales headcount and destroyed whatever value there was for shareholders in favor of stakeholders. Investors are not investing for charity. With management teams that are prioritizing themselves over shareholders, it's no wonder no one wants to invest.