Consolidation, de-consolidation and antibiotics.

Over the last 30 years there has been tremendous consolidation within the pharmaceutical industry. In 2003, Karen Bush of Johnson and Johnson looked at the histories of six of the large pharmaceutical companies over the preceding 20 years. Karen found that these six companies derived from mergers and acquisitions of 70 precedent companies. If extrapolated to large pharmaceutical companies in general, this would indicate a 91% consolidation over 20 years. Since then, we should add the merger of Aventis with Sanofi to form Sanofi-Aventis, and the recent purchases of Schering-Plough by Merck and of Wyeth by Pfizer. I cannot begin to imagine how many jobs were destroyed by this process. This also means that there are simply fewer and fewer companies around who might be doing antibiotic research even if they were so motivated. In fact, we are now down to only 4-5 large companies still active in antibiotic discovery research.
The industry, in my view, cannot continue to survive in its current large company, blockbuster-dependent configuration. There are simply not enough multi-billion dollar drugs being discovered to support all those companies that need them for survival. Take Pfizer-Wyeth for example. This will be a $60 billion company needing to generate anywhere from $3 to 6 billion in additional revenues (or cost savings) every year. There will be cost savings after the merger, but eventually Pfizer will have to come up with one or more very big products to survive. And this is not just true of Pfizer, but applies to all of the current giants with 10s of billions of dollars in revenue coming in each year. I do not believe that this is feasible. The giants will have to break themselves up into more bite-size pieces.
In terms of antibiotics, Pfizer-Wyeth will have; piperacillin-tazobactam, a billion dollar product that is just starting to feel major effects from loss of its patent position; tigecycline, launched in 2005 and now selling around $250 million; and linezolid which is selling over $1 billion but which is threatened with loss of its patent exclusivity in 2015. For a start-up company, this would be a very strong beginning. It would allow a rapid entry into the public markets for additional investors. The new company could then go about its business of both trying to discover and develop its own new antibiotics and to bring in products from outside, perhaps from biotech, to fill out its pipeline. In my view, the new company would be much smaller than its current configuration within the larger company in the sense that it would have a small number of key internal folks who would manage programs through, mainly, outside contractors, much as is done in biotech. The marketing organization could be more streamlined and could incorporate collaborations with external parties. This would allow the new company to break away from old outdated marketing policies of the larger parent (if they exist). This solution also has the advantage of avoiding the enormous large pharma bureaucracy, allowing the new company to react more quickly to changing situations and to make decisions more efficiently. When will large pharma realize this and how long will it take the smaller entities that will emerge to start cranking on antibiotics again? I just hope I am around to see it and that some of the folks who have been displaced by the ongoing mergers and acquisitions will land back in the antibiotics game.

Connecting the dots . . . not.

For this blog, I was inspired by the events following the failed underwear bombing of a US bound airliner on Christmas day and research I did for my last blog on KPC carbapenemase. I contacted the CDC to see if they had any updated active (as opposed to passive) US surveillance data on these highly resistant pathogens. I was a little shocked by the response I received – don’t hold your breath.

In 1999, the department of Health and Human Services formed the Interagency Task Force on Antimicrobial Resistance. The basic premise was to get various government agencies form a common plan of attack for the problem, to communicate with each other and to develop cross-agency plans and projects. Aside from those agencies like the CDC, NIH and FDA, the Task Force ultimately included the Agency for Healthcare Research and Quality (AHRQ), Centers for Medicare Medicaid Services (CMS), the Health Resources and Services Administration (HRSA), the Department of Agriculture (USDA), the Department of Defense (DoD), the Department of Veterans Affairs (VA), and the Environmental Protection Agency (EPA). In this way, all aspects of the problem of resistance, antibiotic overuse, infection control, surveillance for resistance, antibiotic use in animals and crops, environmental contamination with antibiotics and our suffering antibiotic pipeline could be addressed in a coordinated way. Great idea! But what makes any of us think that the rest of government is better able to connect the dots than our various intelligence agencies?

The plan is available online through the CDC website (www.cdc.gov). Some agencies, especially the CDC, have done a good job in educational outreach of antibiotic resistance and have carried out some important surveillance under the auspices of the Task Force. The NIH, in 2006, established the Drug Discovery and Mechanisms of Antimicrobial Resistance (DDR) to provide appropriate expertise to review research grants on resistance. (Of course it took them 20 years to put this in place since it was first recommended by another task force back in 1986). Even though this year only 1 in 17 grants will be funded, NIH has succeeded in reversing a trend going back to the 1950s of not funding antibiotic research. The Centers for Medicare and Medicaid Services, as part of their quality initiative for hospital reimbursement has identified certain hospital acquired infections for which it will no longer pay. This one initiative may have considerable impact even though it is a controversial one. The FDA, as far as I can tell, has slid backwards in their goals of stimulating antibiotic discovery and development. Large pharmaceutical companies have continued to leave the field in the last decade and essentially none of those who halted antibiotic research have come back to it.

If I had to give the Interagency Task Force a grade after a decade of work it would be D. Why are they doing so poorly? There are two major reasons and you can guess what they are. Money is number one. These agencies all compete for funding within the federal budget. Those within HHS compete for HHS monies. The goals of the Task Force require funding which has never been forthcoming in any kind of systematic or dedicated way. Yet we lose more Americans every year to antibiotic resistance than to terrorism, automobile accidents, and war. We lost 58,236 Americans in the entire Vietnam War, but we lost 63,000 per year to antibiotic resistance just in our hospitals alone! That translates to over 630,000 Americans lost to resistance since the inauguration of the Task Force. Where are our funding priorities?

The other issue is that these agencies do not communicate well. The actions already undertaken by the various agencies were the result of efforts within each of them individually. Where is the coordinated attack? Where are the cross-agency goals and projects? This is related to the first problem – they compete for funding. They are all large bureaucracies that do not change their behavior quickly.

In my view, we need a centralized and independent authority with expertise in multiple facets of resistance and a reasonable budget. This budget can come in part from all the agencies already part of the Task Force. Let the agencies have some of their budget monies dangled in front of them that they would only be able to access with practical, important and coordinated plans to deal with multiple facets of the resistance problem. Let them compete for grant monies for a change.

FYI – We have just agreed to establish the EU/US Transatlantic Taskforce on Antibiotic Resistance, focused on appropriate use of antibiotics and strategies for improving the pipeline of new antibiotics. Lets hope it works better than the Interagency Task Force that has been in place for the last 10 years.

And then there was none.

I was contacted recently by a journalist about antibiotics in development for Gram negative infections. The subject of carbapenem resistance in Klebsiella and other Enterobacteriaeceae like E. coli, came up and started me thinking about my next blog.
What am I talking about? These bacteria can cause everything from minor infections of the urinary tract and surgical wounds to serious, life-threatening pneumonia. Most of the time, they occur in hospitalized patients, but they also cause serious infections in those in chronic care facilities and even within our communities. In years past, we had a wide choice of antibiotics active against these bacteria. The sulfa drugs and tetracycline worked. Ampicillin or the combination of amoxicillin (similar to ampicillin) plus an inhibitor of the enzyme that destroys ampicillin, B-lactamase, worked (Augmentin). Most of the cephalosporins (similar to ampicillin but with activity against a wider array of bacteria) were also effective. Hospitals had the luxury of deciding which of the many effective drugs they would put on their formularies. In many parts of the world, including the US, those days are long gone.
In many hospitals and chronic care facilities today, resistance has gotten to the point where only one (essentially) class of antibiotics is left for physicians and patients, the carbapenems. For these physicians and patients, our antibiotic of last resort has become our drug of first choice. Given the “you use it you lose it” rule of antibiotics, you can guess what is happening now. These Gram negative pathogens, especially Klebsiella have acquired a gene for a new enzyme (B-lactamase) that can destroy the carbapenems. Its called KPC for Klebsiella pneumoniae carbapenemase. The first one of these was isolated from a patient in North Carolina in 1996. The new enzyme destroys the penicillins like ampicillin, even our most modern cephalosporins, and our last line drugs, the carbapenems. KPC is not inhbited by currently marketed B-lactamase inhibitors – so those combinations like Augmentin and others are not effective. In addition to KPC, these bacteria are frequently resistant to multiple other antibiotics, even the quinolones like ciprofloxacin or levofloxacin. To treat infections by these pan-resistant strains, physicians are going back to a really old antibiotic, colisitin. Colistin was discovered in 1947. Given the time when it was approved for use, we don’t really know how well it works nor do we know how toxic it really is. My own personal experience treating patients with colistin was not encouraging on either front.
KPC Klebsiella are now spread throughout the world. We don’t have good survey data for many geographic locales. (I can’t understand why this is so). In New York City, about 30% of hospital Klebseilla carry KPC. The strains are also widespread in urban hospitals of Pennsylvania and New Jersey. Israel, Greece and China also have significant epidemics of infection with these strains.
Do we have antibiotics effective against KPC bearing bacteria coming through the pipeline? We have a new B-lactamase inhibitor from Novexel, lovingly called NXL-104, which is highly active against the KPC enzymes. NXL-104 is being developed in combination with cephalosporins (ceftazidime and ceftaroline) by Novexel, soon to be Astra-Zeneca and Forest. NXL-104 containing combinations are extremely effective against the KPC bearing bacteria. To my knowledge, there is nothing else in the later stages of development for these bacterial pathogens.
There is hope, but one new B-lactamase inhibitor is not much of a global strategy when our last line antibiotic has already become our drug of first choice.

Hope and skepticism for 2010.

I have been reviewing recent efforts in Europe to deal with the antibiotic conundrum. I am astonished that Europe is so far ahead of the US in their thinking and that the European effort is being led by Sweden, which has some of the lowest antibiotic resistance rates in the world. Having lived there several years, I find Europe amazing. because it is such a huge bureaucracy of such disparate cultures, languages and even alphabets. It is hard for me to imagine that such an organization can function.

It is clear that Europe recognizes that there is an ongoing need for new antibiotics active against key resistant pathogens. They estimated that 25,000 European patients died from an infection caused by such organisms and that these infections led to 2.5 million additional hospital days and additional in hospital costs of 900 million Euro ($13.5 million) per year. Overall, the additional costs to society of these infections was estimated at 1.5 billion Euro ($2.25 billion) per year. In their report, it was clearly stated that these figures almost certainly represent an underestimate since all costs, such as those attributed to intensive care for example, could not be taken into account in their model.

The various reports also examined the numbers of antibiotics in various stages of development. Suffice it so say that there are precious few, especially when looking at those active against resistant gram negative pathogens.

In proposing various solutions, the European reports examined the approach of the EMEA to antibiotics. Here, there could have been a great deal more detailed analysis and thinking in proposing ways forward. The EMEA is currently considering new guidance on developing antibiotics, and from my view, it is more of the same.

But perhaps the most important contribution to European (and global) thinking came from Policies and incentives for promoting innovation in antibiotic research, commissioned by the Swedish Government and written by Professor Elias Mossialos and his co-workers at the London School of Economics and Political Science. Their basic suggestion is to use a combined “push-pull” mechanism. In one embodiment of such an incentive, Europe would essentially take on some proportion of the development costs for a compound thus reducing or eliminating the risk for the company depending on the amount provided. This, in their model, is equivalent to purchasing an option to buy quantities of the antibiotic should it be approved by an appropriate regulatory body and should it meet preset criteria such as activity against resistant pathogens (which would in turn require more precise definition). This would be the “push” part of the mechanism. If the antibiotic were to be approved, Europe would then be obligated to purchase a set amount, I presume in terms of courses of therapy, at some set price. This would be the “pull” portion. The attractiveness of this model to industry would largely depend on the size of the “pull.”

Many companies use a calculation of the presumed Net Present Value (NPV) of a product to decide whether or not it is worth pursuing. It is because of this calculation that many companies have abandoned antibiotics since the ultimate sales do not provide much value above and beyond the costs of development. In the calculation of NPV for a product, upfront expenses like those for late stage clinical development and the early marketing expense for launching the product count heavily. At the same time, later earnings are discounted for inflation. So companies are always looking for products that provide for high, early sales – “a steep revenue curve.” The European approach is attractive when viewed this way. The “option” on the product will relieve a portion (hopefully a large portion) of the upfront expenses for late stage clinical development. The “pull” would bolster the early portion of the sales curve. Thus the push-pull approach, if both components were large enough, would have a substantial effect on the overall NPV for the product.

The European Council has now recommended that the European Commission implement these or similar proposals to ensure a pipeline of new antibiotics. They gave them a time frame of two years(!!). I am both skeptical and hopeful at the same time.

A Bittersweet End to 2009

Here it is, Christmas eve, and I'm blogging about antibiotics. What is wrong with me?

The end of this year is bittersweet for me. I have been an independent director on the board of a biotech company, Novexel, for the last several years. Yesterday, Novexel was purchased by Astra-Zeneca who, in turn, were supported by Forest Pharmaceuticals in the US. Novexel was a spin-out from Sanofi-Aventis and was able to take several of the compounds that were included in the spin-off all the way through Ph. II clinical development. I am very proud to have been part of that effort. Novexel built a strong scientific and management team - one of the best in biotech as far as antibiotics are concerned. This team was responsible for Novexel's success.

A trade sale has frequently been the best outcome for biotech investors and that has been even more true since the economic crisis of the last two years. In the case of Novexel, its products will now be developed through Phase III and will then be marketed by Astra-Zeneca and Forest. That is a great outcome for patients and physicians since new antibiotics active against resistant bacteria will be available to them as a result of this transaction. For the people of Novexel, things are less clear. Other biotech exits, like going to the public markets and licensing rights to products to support development and marketing have not been possible these last two years. But that strategy allows for the creation of new companies, like Cubist in the US and creates jobs as opposed to destroying them. This alternate strategy also engenders an ongoing innovation which may be lost with a trade sale.

So the end of 2009 is bittersweet. Good and valuable antibiotics will now be provided to patients who need them but a great biotech which brought these products forward from the lab bench to the late stages of clinical development will cease to exist.

The FDA, pneumonia and new antibiotics - Progress?

The FDA met with its Anti-infectives Drug Advisory Committee on Dec. 9 to discuss how industry should design clinical trials for new antibiotics to treat pneumonia. It was the clinicians vs. the statisticians and, maybe, just maybe, we all will win. The FDA stated in their summary that infeasible trial designs were unacceptable. PROGRESS! They also showed that, based on clinical grounds alone, antibiotics have an enormous effect on pneumonia by day 3 of illness. Dr. Mary Singer of the FDA showed data from the 1930s through the 1950s demonstrating that, compared to no effective therapy, antibiotics made 30-70% more people significantly better by day 3 of therapy. Of course, every clinician who has ever seen a patient knows this already. One problem will be to better define what "better" means in in 2009.

The advisory committee essentially rejected a call by Public Citizen and others to make mortality the only possible endpoint for clinical trials in pneumonia. Most felt that such trials would not be feasible since they would have to enroll up to 50,000 patients per trial for two trials. In spite of this, the statisticians insisted that mortality was the only scientifically acceptable endpoint.

So - lets make an infeasible trial design which will guarantee that we will have no new drugs for pneumonia in order to achieve perfect science. Let's let the perfect kill the good.

The committee also voted that only those patients where you could show a bacterial pathogen should be evaluated for efficacy in the trial and that patients who had received any prior antibiotic should be excluded from trials. Both of these will still make the design infeasible because of the numbers of patients required and the difficulty of finding patients who have had no antibiotic before they are actually enrolled in the trial.

But I see light at the end of the tunnel. If the FDA would agree to decrease the statistical stringency they require, everything becomes easier. They can justify this scientifically because the effect of antibiotic therapy at day 3 is so great. Then, we need to either be able to pool patients who have a definite bacterial pathogen demonstrated as the cause of their infection across two trials, or we need to be able to use investigational diagnostic tools to increase our diagnosis rates in the trial. If all of this could be done, we can again start to develop new antibiotic for pneumonia. If we can't get most of this done, I'm afraid we will have a long antibiotic drought ahead of us. We will also risk losing more companies who will abandon antibiotic research as simply not providing enough of a return on investment.

Its time for the FDA to realize that NOT having antibiotics effective against resistant pathogens is a SAFETY RISK. Part of their mandate requires that they make sure we have safe and effective drugs. At least for antibiotics where resistance continues to increase, no new antibiotics should not be an acceptable alternative.

The FDA - another blow to antibiotics?

More and more pharmaceutical companies are abandoning the field of antibiotics research. The markets are marginal compared to treatment of chronic conditions like high cholesterol or chronic depression. The discovery of new antibiotics is getting harder. In recent years, the FDA has released a series of guidelines requiring trials for market approval in various areas of antibiotic development that simply cannot be carried out. The latest set involves the treatment of pneumonia. The release of these guidelines requires enormous work on the part of FDA staffers. But the guidelines as they currently stand, at least for antibiotics taken in pill form, require studies that simply cannot be performed. Why would the FDA require clinical trials that cannot be done? Do they not understand that the proposed design is infeasible? Was it done for political reasons?

Regardless of the reason, if the trial cannot be performed, no new such antibiotics will be developed. The number of infections where the market remains attractive and where industry can still actually carry out the trials required for licensure of a new antibiotic are rapidly dwindling. This will only accelerate the abandonment of this area of research. Without antibiotic research we won't have any new ones. This is all occurring at a time when we desperately need new antibiotics. Antibiotic resistance is rising to the point where for many infections, we no longer have effective antibiotics.

The FDA and its advisory committee are set to review the draft pneumonia guidelines on December 9. Some, like Public Citizen, have proposed even more stringent trial designs that are even less feasible than those already included in the current draft guidelines.

The system is broken. Is this an opportunity to move forward, or will we be forced to take yet another giant leap backwards?