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.