Since the vast majority of products in the antibiotic pipeline, from early discovery through late-stage clinical development, comes from biotech, According to the 2021 WHO analysis, 84% of pre-clinical antibacterial projects come from companies with under 50 employees. 79% of clinical stage (phase I and beyond) come from biotech. Given these observations, I thought it would be worth exploring the health of antibiotic biotech in today's depressing environment. Originally, one of the questions I wanted to explore was the effect of rising interest rates on their ability to raise funds. To do this, I discussed the situation with a number of biotech executives including CEOs and CMOs. My original question rapidly became irrelevant. (Since some executives asked to remain nameless, I am keeping everyone anonymous).
Everyone agreed that the availability of funds to support discovery research and early clinical development has improved enormously over the past decade. CARB-X, Novo, Beam, NIH and others were cited as examples of sources of non-dilutive funding for their companies. One executive lamented that several products that could be clinically very useful failed to attract funding from these sources because they were insufficiently “novel.”
The unanimous opinion was that the space is collapsing slowly but surely from the commercial end backwards. One executive described his company as a “tale of two cities.” While funding for early-stage products was available, once projects attained late development stage, it was more and more difficult to obtain support. All were extremely appreciative of the efforts of BARDA in this regard. The AMR Action Fund was established in 2020 with a goal of investing $1B in the clinical development of needed new antibiotics during the decade. So far, it has invested in three biotechs, VenatoRx, Adaptive Phage Therapeutics and Bioversys but the amount of funding seemingly remains secret. Some executives were skeptical of the efforts of the AMR Action Fund and complained about the speed of their response. (AMR Action Fund did not reply to my inquiries). Private investors will simply not touch the tremendous expense of late-stage development knowing that their financial return might not occur for 10 years or more if at all assuming the product is approved. “Why would I spend $200M to have a successful asset that the market is literally valuing at $20M at best?”
From another executive - “I have to confess that I have given up on reflecting on those things. Time is for action, from where I stand. No choice but to dedicate 150% of my time to saving my company. And I mean finding money wherever it can be found, tap into government subsidies, get creative and think outside of the AMR community box. We are not succeeding as a community, so we'll need to find solutions elsewhere. That's how cynical and slightly desperate I am being right now.”
And another - “It’s a national security risk now given the bankruptcies and company/product failures in the sector. The total absence of a regulatory or legislative 'fix' is also a major factor……we have learned nothing about pandemic preparedness writ large. The next pandemic will be bacterial and we do not have solutions- the pre-penicillin era is here today!”
The antibiotic biotech executives expressed a level of frustration and desperation that I have not heard before and that you generally do not hear in public forums. For clinical stage antibiotic biotechs, regulatory approval, instead of being an exciting and celebratory accomplishment, becomes the beginning of the end. Bankruptcy looms driven by the expense of supporting a newly approved product including post-approval regulatory requirements, manufacturing and marketing in the face of a fatally broken market. While I’m not ready to agree that the antibiotic era has already drawn to a close, I do agree that this is the likely conclusion if nothing is done to address the antibiotic market. The end of antibiotics starts and ends with the market. All the regulatory reform in the world (as much as it might be needed) will not change that. And, sadly, I find I share the pessimism and frustration of these antibiotic company executives in that I do not see the US or Europe providing a solution to the dead market anytime soon.