David's New Book

Thursday, January 9, 2020

BARDA, Paratek and Pull Incentives




In December, BARDA and Paratek announced a large award to Paratek for the development of omadacycline (NUZYRA®) for the prevention of anthrax. The total award is valued at up to $285 million over five years with an option to extend the contract up to 10 years. The grant includes $59 million for the development of NUZYRA for the treatment of pulmonary anthrax and the purchase of an initial 2,500 treatment courses of NUZYRA to add to the current Strategic National Stockpile. The contract provides for additional potential time-based funding including approximately $77 million for existing FDA post-market regulatory commitments that Paratek would have had to fund themselves - scheduled to begin in April 2020. It includes approximately $20 million for manufacturing-related requirements scheduled to begin in June 2020. The remaining staged, milestone-based funding includes the potential for approximately $13 million to support the development of NUZYRA for the prophylaxis of anthrax and a maximum of approximately $115 million to provide for three additional purchases of NUZYRA for the Strategic National Stockpile, each of which will be triggered upon development milestones related to the anthrax treatment development program.

Today I spoke with Evan Loh, the CEO of Paratek. Evan and I worked together briefly when we were both at Wyeth around 2000. Our discussion really centered around my questions as to whether this contract could be a paradigm for a BARDA-driven pull incentive for small pharmaceutical companies like Paratek. Evan’s opinion is clearly a resounding “Yes.” 

As of today, Evan notes that around $1.1 billion dollars have been invested in Paratek including both private, public and non-dilutive funding, since its founding in July 1996. One of the largest Paratek “failure” costs in terms of clinical development was the five-year delay they endured because of FDA’s uncertainty around requirements for antibiotic trials between 2006 and 2012. Another cost was Paratek’s recent  phase II cUTI and uUTI trials. These trials identified a potentially clinically effective dose however this dose did not demonstrate a comparable level of microbiological efficacy. But at least these results precluded them from proceeding into a much more expensive phase III trial. 

Between the provisions of the GAIN Act allowing for extended exclusivity and additional patents, Paratek now has clear exclusivity for omadacycline until at least 2031. 

What does the BARDA contract do for Paratek’s bottom line? Before the BARDA contract, Paratek estimated that their runway, based on $220 million in capital, would run until Q1 2021- about one year. After the BARDA contract, their runway is estimated to go through the first half of 2023 – over two years of extension. Paratek’s cash runway prediction depends on operational costs (they project ~$30-35million per quarter). Success for Paratek will still depend on achieving adequate sales.  But after BARDA, Paratek believes that there is a path to profitability and sustainability.   Evan noted that Emergent Solutions had an order for $500 million for their anthrax vaccine for the SNS.  Based on this, he thinks there may be additional upside potential for Paratek’s interaction with BARDA.  

Evan believes that this kind of pull incentive, where a still-viable company with a product that fills an important medical need, and where sales will still be required to achieve profitability is an important way forward. I agree with him and have so stated in previous blogs. He also expressed how honored he is that Paratek was chosen for this award and that he thinks that this could be an important model for the future of antibiotics.  We all hope that his opinion is shared on Capitol Hill! 

To achieve the required sales numbers, Evan believes that DISARM will be an important incentive because it takes the cost of the drug out of the formulary decision for antibiotics designated in the act. I would like to delve into this further in a future blog. 

So – what do I think about BARDA as a source for a significant pull incentive? I think that this level of incentive might work for a small, publicly held company like Paratek.  It is not possible to underestimate the importance of this action by BARDA to bolster the antibiotic marketplace in a way that also helps to meet our national security needs. But this pull incentive is unlikely to incentivize large pharma or private investors to any great extent. As such, I’m not sure it will end our current cycle of investor exodus from the area and may not provide sufficient confidence in the ability of antibiotic investments to provide a significant return.

Other steps we could take without spending large amounts of money include networking between expert societies. I have written previously about the need for IDSA to step up and revise their clinical guidelines on at least an annual basis.  They could, in addition, ally themselves with expert societies representing oncologists, transplant specialists, surgeons and others such that clinical guidelines on antibiotic use are kept current among a broad range of physicians.  Having additional lobbying strength from these groups would not hurt our cause either.


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. 

Tuesday, December 17, 2019

A Year of Too Little Too Late

Looking back on 2019, it has been a year of climate change for antibiotics. If you are easily depressed – maybe you don’t want to continue reading this “grim-gram.”

The regulators are working hard to come to grips with how to manage small data sets.  This is especially a problem for the FDA where “adequate and well controlled” is the law. Have we made progress here? I certainly don’t know. But without progress, pathogen specific products, microbiome products and others will never make it to market. 

Of course, even if these products do make it, will they be welcomed? The bankruptcy of Achaogen either woke us from sleep, deepened our nightmare or demonstrated that the market works – or maybe all of the above.  Depending on your point of view, no good deed goes unpunished or Achaogen got what it deserved (see this blog). Regardless of your viewpoint here, it is clear that several other biotechs will face Achaogen’s fate in 2020 baring some miracle. 

And what miracle might that be? There is the UK’s effort to provide value-based pricing with a pre-purchase of needed new antibiotic(s).  This will be based on the UKs perceived need in terms of patients requiring such treatment over time. But there are not enough such patients to actually make a market and the UK’s contribution to the market will not be enough to provide a return on investment for companies brining needed new therapies forward. What if every country did what the UK is doing or at least something similar such as the DISARM act?  (DISARM would provide for payment for high priced antibiotics for US patients in need).  But even if this became a global effort, there are still not enough such patients to support more than one or two products. These are baby steps, not miracles. As I keep saying, we need substantial pull incentives to “pull” this off. 

The view of various countries seems to be that they somehow should only pay their share based on their needs.  But we know that will not be sufficient – so what’s the point? What we need here is true leadership and sacrifice.  We need a country or region (think Europe or even North America) to provide the entire pull incentive for the world – and then bring in the followers through negotiation later. Unfortunately, like the situation with climate change, I see no such leadership emerging. 

And these considerations bring me to the issue of support for research and development. Why, I ask, are we doing this? Why do we support research designed to bring products for extremely limited markets forward when we know that without large pull incentives plus a regulatory path forward, such products and their sponsors are doomed? I have posed this question to funders.  They reply with hope for (and a great deal of work to achieve) a better future. How long should we continue along this path? Private funders are voting with their feet. Venture capital and public market investors alike are abandoning antibiotics faster than you can shake a dollar at them. In the absence of sufficient pull incentives in the near future, collapse of these small companies and the pipeline of products they support is inevitable. 

As with climate change, we as a global society (is there such a thing?) seem unable to believe existing data and invest now to provide a better tomorrow. We prefer to close our eyes and ears, stick our head in the sand and await either an apocalyptic event or the slow arrival of the inevitable consequences of our inaction. 

In the past, this would be the point where I would exhort you to be calling your political representatives to push pull incentives. But my experience over the past year convinces me that there is nobody home. Politicians are all focused on reducing health care costs and drug prices and spending additional monies now to save money in the future is not part of their thought process. Certainly none are interested in providing the kind of global leadership we need. 

One way forward, although, again, this might be too little too late, would be to establish a entirely publicly funded antibiotic R&D institute with sufficient funding to bring needed products to market and to support them once they are approved.  This would not be a small investment, but it would occur over time. Politicians do seem interested in supporting R&D. While I have never been enthusiastic about this sort of government approach to antibiotic R&D given their track record, it may be that we have little choice at this point. 

Monday, December 2, 2019

Antibiotics - Europe or a Tapestry of Nations?

I spend a great deal of time in Europe.  For drug regulation, in terms of approval for market authority, there is a centralized European agency and procedure. I have been involved, at least peripherally, in drug pricing discussions with various European national authorities where each has its own rules, regulations, and policies that govern such negotiations. In 1987, Flora Lewis wrote a wonderful analysis of Europe as it considered its future.  The book is entitled, “Europe, a Tapestry of Nations.”  When it comes to drug pricing, it is definitely still a tapestry of nations or even the Wild West, and not Europe. 

 While the European Commission has no direct control over pricing within the various national authorities, it does exercise some control over transparency in pricing considerations within the national authorities. It also has undertaken a number of initiatives over the years thinking (not so much doing) about innovation, access and other common issues.  For details, see this link.  The World Health Organization recognizes this as a problem in Europe as indicated in this 2018 policy brief. The brief notes that there collaborations already exist among and between various European national authorities in the realm of drug pricing. The brief apparently does not explore the idea of a centralized European process for key medicines. 

Given the emerging crisis of antibiotic resistance and the front and center role being played by economic considerations for antibiotics, each European country seems to be taking a different tack.  Most are doing little or nothing to solve this economic problem.  In the UK, a pilot program leading to upfront drug purchases that will depend on the drug’s value to the UK population, is being undertaken. John Rex has uploaded a recent set of slides from a NICE webinar on their plans for this program. 

The problem for me and for all of us is that this may well be too little too late. Even if the UK succeeds in establishing their program, how many other countries will do the same and how long will that take? The time it will take to provide a meaningful return on investment (if that occurs at all) will not save a number of small companies that are currently struggling with impending bankruptcy. A raft of such bankruptcies will probably occur in the near future.  This will further aggravate the death spiral of investment in antibiotics R&D. 

The other issue I find with all of these efforts is the math.   The UK will base their program on the value of products to the UK population (see this announcement). But given the number of resistant infections in the UK, how much money will their upfront purchase entail?  How many products for a given type of resistant infection will qualify for the program?  The number of resistant infections even taking all developed countries together are not enough to drive a sufficient return on investment for companies marketing these therapies – especially if there is to be more than one product for each key resistance type. For these reasons, I support pull incentives that are somewhat divorced from patient numbers. 

Given previous European initiatives, it surprises me that Europe is not playing a more active role here.  I could find nothing in the European Charter or elsewhere that prohibits Europe from doing so.  I conclude, therefore, that it is the national authorities themselves that are adverse to some centralized pricing procedure even for areas where the marketplace is failing to provide reasonable access to needed new medicines like antibiotics. But if we are to have truly valuable pull incentives, a centralized European approach will be required. 

Some, including me, have argued for years that the US, though its irrational drug pricing policies, have supported pharmaceutical innovation for the rest of the world. The US still accounts for about 50% of the total pharmaceutical market and is the largest single country contributor to pharmaceutical company profits in general. PhRMA argues that any change to, say, a US national negotiation for drug prices as is done in most other countries and as has been recommended by many including the National Academies, will reduce innovation. They are correct.  Given that large pharmaceutical companies generally base their R&D budgets on yearly profits, a large change in profits as would occur if the US adapts a more rational pricing policy, would result in lower R&D investments and, consequently, less innovation. 

I would argue that it should be the turn of other countries, including those in the EU, to better support innovation. One opportunity for Europe to lead in this regard would be to provide substantial pull incentives for needed new antibiotics.  This would require a dramatic change in the way EU countries work now, but for the sake of our future I think they should consider this approach. Maybe the US would even follow their lead . . . 



Sunday, November 24, 2019

Antibiotics - Innovation or Clinical Utility?

Lately I have become intrigued with the word, innovation. Innovation is used a criterion for funding grants, for status in reviews of our antibiotic pipeline, for intelligence, imagination and many other great things. I want to explore the meaning and utility of innovation in the particular context of antibiotic discovery and development and of our antibiotic pipeline.

A story I tell frequently comes from my days as a practicing infectious diseases physician at the Cleveland VA Medical Center. In the early 1980s our surgical ICU suffered an outbreak of bacteremia and pneumonia caused by Serratia marcescens resistant to all the antibiotics we tested at the time (colistin was not on that list). But imipenem was undergoing its phase 3 testing and I was able to obtain some under a compassionate use protol that Merck had established. I am sure that we saved lives. But imipenem is really just a B-lactam – albeit a very special one.  Is it innovative? I think so.  But more importantly, its clinical utility was infinite for the care team and our patients. 

To me, innovation stands for imagination, daring, intelligence and the ability to see things beyond what we know and think we understand. To innovate is to navigate to where we have not gone before, and, hopefully, to see a way to get there. So, yes, innovation can be a good thing. In the context of antibacterial discovery, Theuretzbacher et. al. note that for many, innovation connotes a novel target or novel chemistry or novel mode of action. In the end, Theuretzbacher et. al. end up defining innovation as simply meaning that the therapy shares no cross resistance with existing therapies. 

I would like to introduce a more useful concept – clinical utility. Clinical utility clearly would include a lack of cross-resistance, but also may include other advantages.  A new therapy might avoid the need for monitoring drug levels, it might be more safe than existing treatments, it might reduce the numbers of doses required, it might be orally bioavailable, or it might avoid the need for new, experimental diagnostic tests. All of these speak to the utility of any new therapy to the physicians who prescribe it and the patients they treat. 

In my world, innovation also means risk. And risk in the pursuit of new and important therapies is fine as long as everyone understands that this is the case. Therapies directed at novel targets, those that use novel chemistry and those that exploit new modes of action all are subject to increased risk.  The risks include the risk of scientific failure early in the discovery process, the risk of failure from non-clinical safety studies and the risk of clinical failure either because of safety or efficacy issues. 

On the other hand, the use of known targets, known chemistries and known modes of action reduces risk. Sometimes, this lack of “innovation” might also lead to a lack of clinical utility.  But, historically, while this does occur, there have been many very useful but not so innovative therapies to come forward over the last several decades. The B-lactamase inhibitors recently introduced to market (avibactam, vaborbactam) have a much broader spectrum of inhibition than their predecessors. They are innovative in that they utilize new chemistries to achieve their improved spectrum. Of greater importance to me, they have increased clinical utility based on this broad spectrum of activity and still avoid most cross-resistance. A major addition to our clinical armamentarium will be aztreonam-avibactam that will have activity against Class B B-lactamases, a group of enzymes that have so far eluded the BLI-BLA strategy. At this point, one could argue that this combination is not so novel or innovative and that would be true.  But look at how clinically useful it might be. Another pipeline combination that achieves this goal is VNRX5133-cefepime from VenatoRx. In this case, the inhibitor is still based on boron chemistry like vaborbactam, but is able to assume different binding modes to inhibit class A and B B-lactamases – an innovative mode of action.

When I look at drug discovery and development plans and proposals, although I consider “innovation,” what I truly evaluate and value is potential clinical utility. These two characteristics do not always go together. I suggest that we all prioritize providing better (but not necessarily innovative) therapies to our patients with unmet medical needs as our ultimate goal.

Wednesday, November 20, 2019

The CDC's Report on Antibiotic Resistant Threats in the US

This is Antibiotic Awareness week. The US Centers for Disease Control just released their new report, Antibiotic Resistant Threats in the United States, 2019. They used “new” methodologies to both retrospectively reconstruct their 2013 report and to carry out the studies used for the 2019 report.  In that way, the numbers are directly comparable. This report is extremely valuable and I recommend it as required reading for everyone interested in infectious diseases and antibiotics. 

While this new report is very welcome and while I (and everyone else) appreciate(s) all the efforts by the CDC to address resistance, there are still limits to the report and areas that I would have liked them to address differently. First, the numbers cited by the CDC must be considered an underestimate since they are derived almost exclusively from hospital data.  There are probably many infections arising in the community that do not present to acute care hospitals including those in long term care facilities. Second, I would have preferred that the CDC emphasize more that in spite of all of our efforts, no matter how successful, at antimicrobial stewardship and infection control, resistance will still emerge and we will still need to rely on new antibiotics to control these resistant infections. As such, additional discussion as to the factors combining to deprive us of these needed new antibiotics and suggested approaches to resolving this dilemma would have been helpful.

If you add the numbers for C. difficile infections to those for other resistant infections together, the CDC reports that there are ~ 3 million such infections per year in the US.  These are associated with almost 48,000 deaths every year.  These deaths approach that endured by the US military for the entire Vietnam war (58,000) and are greater than the numbers of Americans killed in traffic accidents every year (37,000).  The CDC provides data for certain resistant infections (see report) showing that they place an important economic burden on US healthcare. The CDC appropriately notes that antibiotic resistance threatens our ability to provide adequate care for surgery, chronic conditions like diabetes, organ transplant recipients, kidney dialysis patients and those with cancer.

In its report, the CDC emphasizes that they are leading the fight against resistance and, in some cases, we are making progress. For example, infections caused by carbapenem-resistant Acinetobacter have decreased since 2013.  But infections caused by carbapenem resistant and ESBL Enterobacteriaceae have increased.  In long term care, C. difficile infections may be decreasing, but we have not yet seen that in US hospitals. 

While the CDC emphasizes approaches like vaccination, infection control, antibiotic stewardship in hospitals, in the community and on our farms, and while they note that antibiotic resistance is a one health problem, they shy away from the economics of antibiotics. They do not deal with the important role that expert societies can play in guidance on all of these issues, but, importantly, a discussion of their role in assuring appropriate therapy is not really explored. 


The report outlines some of the difficulties in the development of antibiotics and diagnostics and it also decries the poor pipeline for many of the resistant infections considered as threats in the report. They believe that there is not enough “innovation” in the pipeline. 

In terms of innovation, I note that the WHO and others also see this as a problem in the antibiotic pipeline.  I strongly disagree with the concept that innovation is the most important criterion by which to judge the pipeline.  The most important criterion should be clinical utility.  Does the compound address resistant infections?  Is it safe?  Does it offer dosing or other advantages over other available therapies? (This will be the subject of a subsequent blog).

One area that CDC ignores is the economic barriers to the study and marketing of new antibiotics. The report sticks with the steps that we should all be taking to preserve the antibiotics that we have as long as possible.  And I agree that this is an important effort that we all should support. But, if the CDC leads the fight against resistance, they can hardly step back from dealing with the single major impediment to providing the robust pipeline they so clearly desire. To me, this is a singular omission in this otherwise complete and important document. 

Wednesday, October 30, 2019

The Echo Chamber


I just finished writing a commentary for Antimicrobial Agents and Chemotherapy entitled, The Economic Conundrum for Antibacterials. You can find the accepted manuscript ( requires subscription) here.  Earlier this fall, I was interviewed for a podcast – you can listen here. In both cases, I argued that the numbers of patients with highly resistant infections today are not sufficient (in the developed world) to drive an adequate market for antibacterial drugs active against these resistant pathogens.  I made the point that our pipeline is precarious. Next I tried to show how the economics of commercialization of new antibacterial drugs put companies, especially the small companies that provide the bulk of our antibacterial pipeline today, in the crosshairs of financial failure such as occurred with Achaogen. 

Both during the podcast interview and in the review of the manuscript, I was confronted with what seems to be a dominant view outside of our own echo chamber. That view is that the market is not failing – it is working and telling us that there is just not a sufficient medical need today and that it is not guaranteed that the need will be there in 10-20 years. 

The reviewer provided additional feedback that I will try and summarize. 

They noted that even though the pipeline might be considered to be inadequate by us “experts” it is more robust today than it has been at any time since the 1990s. And, I admit, that is true.  But a careful look at the pipeline reveals a number of substantial weaknesses that did not exist in the 1990s.  First, the majority of the sponsoring companies are small biotechs with precarious financing. Second, many of the pipeline products, especially those in preclinical and early clinical development are very high risk. I still believe, therefore, that the pipeline is not going to be adequate if resistance to current first line therapy continues to grow and especially if resistance to second and third line therapies emerges and grows rapidly. 

The reviewer also was of the opinion that Achaogen got what it deserved. He argued that they sunk a great deal of money into a product the market for which was probably not what they advertised.  And they were critical of Achaogen’s investment in discovery research. 

The reviewer was also apparently upset that much of the small molecule pipeline today consists of “me too” products including Achaogen’s plazomicin. My view is that one person’s “me too” is another’s best friend. But it is clear that for plazomicin, the projected medical need and market were just not there. 

In my paper, I spent time reviewing post-approval activites that companies undertake and their costs.  Some of these are required by the regulatory authorities while others are more focused on education and “marketing.” The reviewer noted that no company should commit to exorbitant post-approval obligations for a product with a very limited market. 

Finally, I was accused of being an investor in the industry who is just out to make a “tone” of money. 

While it was difficult for me to read the review of my paper and, at times, to hear the podcast interviewers’ views, the experience was eye-opening.  I find that us “experts” spend a great deal of time talking among ourselves in a sort of echo-chamber bubble that protects us from these opposing views. And I see that these views are not necessarily those of a small and radical minority, but probably represent a far more substantial set of clinicians, pharmacists and other stakeholders. 

One area where everyone seemed to agree (whew!) that action was necessary was at the level of expert societies and automated susceptibility testing devices.
·      I suggested that that expert societies step up to the plate and provide a minimum of yearly update on suggested therapies for key infections; 
·      And that automated susceptibility testing kits be required to provide clinical laboratories with testing capability for such new, high priority drugs within one year of approval. 



After all this reflection, though, I find myself back at the starting line. What will we do today to deal with a future of uncertain rates of bacterial resistance? Will we act to protect investments in important potential antimicrobial treatments or will we let market dynamics take over?