Antibiotics - Go East!

Asia - Satellite image - PlanetObserver (Photo credit: PlanetObserver)

Where will we find new markets for antibiotics and other pharmaceuticals?  Asia and other emerging economies – that’s where!  According to Bayer, China was their third largest market globally last year.  Asia overall accounted for 7.8 billion Euro (over $10B) in sales for Bayer – a whopping 21.5% of their sales globally. The sales in Asia were very similar to that for North America.  Bayer is a great example since, on the antibiotics side, they sold their North American business to Schering-Plough (now Merck) a number of years ago.  This shows where their thinking was then and how this perception has now been vindicated.

In a report published last year and freely available to all, the Economist notes that pharmaceutical sales in Asia have more than doubled since 2001.  Projections going out to 2016 suggest an annual growth rate of 13% is sales with total sales hitting an astounding $386B. A number of factors are driving this growth and include a growing population (shown below and taken from the Economist report), an aging population with longer life expectancy and a growing middle class able to afford to pay for quality health care.

The resulting projections for increases in health care spending, taken directly from the Economist report are shown below.

Of interest, the profitability index has been rising more slowly and in an erratic way.  This can be attributed to sporadic rises in wages and other costs.  Thus, sales volumes and cost savings will have to combine to maximize profits in Asia.

These observations can be used to explain the surge in antibiotic sales in Asia.  Shown below from IMS data kindly provided last year by Astra-Zeneca, are sales of antibiotics in the years 2006-2010 comparing Asia-Pacific with North America.  If you were a pharmaceutical company wanting to maximize opportunities for antibiotics, where would you place your bets?

I believe that these trends will lead to an increase in the number of large pharmaceutical companies pursuing antibiotic R&D.  Evidence that this is already happening comes from the Bayer-Trius deal largely driven by Bayer’s Asia division, the recent re-entry of Sanofi-Aventis into the antibiotic R&D game and statements by large pharma executives like Mark Mallon from Astra-Zeneca as quoted in the Economist report. 

The corollary to this is that if the FDA continues to make the development of antibiotics infeasible in the US, as I have been saying for a long time now, companies now have the option of developing their antibiotics under European aegis, ignoring the US market and looking to the East to sell their wares.  And this is exactly what will transpire.  You read it here first!

Limited Population Antibacterial Drug Approval (LPAD)

I am posting this very brief blog today to encourage you to support congressional approval of LPAD. The legislation calls for extended authority for the FDA to approve antibiotics based on a limited data set for use in populations with high medical need.  This has been reviewed briefly in a couple of previous blogs. Although I remain unconvinced that the FDA actually needs this legislation from a purely statutory point of view, I have become convinced that they need it to provide cover from congressional criticism when, after approval of a drug based on limited data the inevitable problem emerges. This means that without such cover, it is not clear that the FDA will have what it takes to do the right thing and go forward anyway.  I am also completely convinced that for some new drugs, like  those active only against Pseudomonas or those active against metallo-beta-lactamase bearing organisms like NDM-1, such a new development pathway is absolutely essential.  Luckily - the back-up plan is to seek approval under the auspices of Europe if we cannot under the FDA. Of course, if this occurs it will mean that Americans will be left without access to these new and needed antibiotics.

So check out the summary of the legislation as proposed by IDSA, then write your senator and congressman - please!

Shrinking Pfizer is Good for Antibiotics

Logo of Pfizer Incorporated. (Photo credit: Wikipedia)

Pfizer stock price over 10 years. (Photo credit: Wikipedia)

There has been more talk in the news lately regarding Pfizer’s plans to spin off various businesses.  I have discussed the general issues I will cover today in two previous blogs. The recent news that Pfizer, in addition to spinning off its nutritionals and animal health franchises, is considering selling off its generics business. Talk of this breakup was spurred by Jami Rubin’s report a couple of weeks ago based on a briefing of Goldman-Sachs by Pfizer.  Some analysts suggest that this plan could increase the value of Pfizer by over 50%. But all will depend on Pfizer’s ability to advance its pipeline to marketed products.  And that remains to be seen.

As I have noted in the past, another approach would be to break things down further.  As it stands, there is no added value of the now almost non-existent anti-infectives effort at Pfizer.  But there are still early compounds and expertise plus Pfizer still sells linezolid, tigecycline and even piperacillin-tazobactam even though the latter is now generically available as well. These sales probably add up to about $2B in annual revenue.  Pfizer generated $67B in revenue in 2011 – so antibiotics remain a drop in the old bucket. On the other hand, a spin-off of the antibiotics business including their preclinical and early clinical assets would probably be worth much more outside of Pfizer than it is within Pfizer. Even with all the generic intrusion that will occur (linezolid loses patent protection in 2015), there will still be plenty of revenue to drive a small company.  Funding resources for such a spin-off could include both private equity as well as venture capital. The same strategy may work for other businesses within Pfizer – who knows? 

I am sure that Pfizer is not the only large pharmaceutical company where such a strategy would make sense.  I can think of several other good candidates off the top of my head – and so can you! The availability of non-dilutive funding through NIAID, BARDA or the Innovative Medicines Initiative or other sources adds to the attractiveness of the antibiotic spin-off.

But for the future of antibiotics, it is clear to me that the sales of current Pfizer antibiotics could drive new R&D in a new and much smaller company to bring new, novel and desperately needed products to patients and their physicians. What could possibly be wrong with this picture? Why can’t Pfizer bring itself to do the right thing? Is it that the problem is too small to deserve their attention?

I leave these questions in your capable hands – I do not have the answers.

Advice and Consent

The western front of the United States Capitol. The Neoclassical style building is located in Washington, D.C., on top of Capitol Hill at the east end of the National Mall. The Capitol was designated a National Historic Landmark in 1960. (Photo credit: Wikipedia)

President Barack Obama signs H.R. 2751, the “FDA Food Safety Modernization Act,” in the Oval Office, Jan. 4, 2011. (Official White House Photo by Pete Souza) License on Flickr (2011-01-12): United States Government Work Flickr tags: WASHINGTON, DC, USA (Photo credit: Wikipedia)

An interesting article appeared in the New York Times today discussing new proposed rules from the Obama administration on the relationship between lobbyists and congress.  Apparently, these new proposed rules would limit the ability of congress folks to interact with registered lobbyists under circumstances where anything free might be involved such as film screenings, cocktail parties, etc. So, it seems like it would be OK to meet with lobbyists – they just can’t pay for drinks and meals nor could they provide free entertainment.  It also seems that if the congressperson is an invited speaker at such an event – that would also be OK. I’m confused – but probably so is anyone else who tries to wade through all this.

I was struck by the article in the Times because it notes that lobbyists are complaining that they would no longer be able to educate congress on the issues important to the lobbyists clients.  The fear is that congress will become alienated and distanced from regulated industry to the point where it is no longer able to make rational decisions. It may surprise you to hear that I sympathize (within limits) with this view.  For me, a great example is the anti-infectives division at the FDA. They, through congressional pressure and through unreasonably tight restrictions on interacting with industry coming from regulations around conflict of interest, have become completely isolated from the industry that they regulate.  This has been an important contributor to the greatest debacle of our century in the discovery and development of new and needed antibiotics.  For almost a decade now, guidance documents from the FDA for the development of new antibiotics have required infeasible clinical trial designs.  This has increased the regulatory uncertainty for the pharmaceutical industry and has, in a number of cases, led directly or contributed to their exit from the field of antibiotic R&D.  I believe that if the FDA had been able to get appropriate advice (in the absence of political pressure from congress) from folks who actually are involved in the development of new antibiotics prior to releasing their guidance documents, they would have understood that their proposed designs were infeasible from the outset.  The way the process currently works, the FDA releases a guidance document requiring infeasible clinical trials.  There is then uproar from the industry and the Infectious Diseases Society of America.  The FDA then reacts (we hope – but this has not yet actually happened) with tectonic speed to revise the guidance such that required trials are again feasible.  In the meantime, more companies abandon antibiotics research. Is this a way to conduct business?  Of course it isn’t.

My nightmare is that this system becomes the way of doing business in congress. The result will be the passage of idiotic laws that then have to be modified after years of delay.  On the other hand, I don’t see why lobbyists should have to provide free meals or drinks to be able to speak to congress folks. I guess this boils down to the question of what it takes for a lobbyist to speak to a congressperson. But I agree that the complete isolation of government from regulated industry is unhealthy and may even be risky. 

Sinusitis - FDA vs. Physicians

The Infectious Diseases Society of America just released updated guidelines for the treatment of acute bacterial sinusitis in adults and children.  The IDSA recommends antibiotic treatment for patients where bacterial infections are more likely -

1. The following clinical presentations (any of 3) are recommended for identifying patients with acute bacterial vs viral rhinosinusitis:

            i. Onset with persistent symptoms or signs compatible with acute rhinosinusitis, lasting for ≥10 days without any evidence of clinical improvement (strong, low-moderate);

            ii. Onset with severe symptoms or signs of high fever (≥39°C [102°F]) and purulent nasal discharge or facial pain lasting for at least 3–4 consecutive days at the beginning of illness (strong, low-moderate); or

                        iii. Onset with worsening symptoms or signs characterized by the new onset of fever, headache, or increase in nasal discharge following a typical viral upper respiratory infection (URI) that lasted 5–6 days and were initially improving (“double-sickening”) (strong, low-moderate).

This is because only bacterial infections will respond to antibiotic therapy – viral infections will not.

The FDA, in 2003, decided that this was a self-limited disease for which there was no evidence of a benefit for antibiotic treatment. So – who do you trust – the FDA or infectious diseases specialists?


Two recent studies examined this question.  Both enrolled patients with signs and symptoms of sinusitis.  Half the patients received placebo (sugar pill) and half received antibiotics. One was carried out in children and the antibiotic was amoxicillin-clavulanate (active against certain resistant strains of bacteria).  The other studied adults and the antibiotic was amoxicillin – not active against certain resistant strains. The study in children found that the cure rate among antibiotic treated patients was 50% compared to 14% among those receiving placebo.  At the same time, only 14% of those receiving antibiotics failed therapy while 68% of placebo recipients failed.  The study of adults using amoxicillin showed no difference between amoxicillin and placebo.  How could two similar studies come up with opposite results? Well – the most likely answer is that the study of adults was seriously flawed.  First, the study only enrolled patients with severe symptoms early in the course of disease.  But the guidelines have always suggested that patients with prolonged symptoms – 10 days or more and those that have had relapsing symptoms where they first started to get better then got worse again were good candidates for acute bacterial sinusitis that might benefit from antibiotics. The second flaw is that the study used amoxicillin that is not active against many resistant strains of bacteria that commonly cause sinusitis.  In fact the new IDSA guidelines call for using amoxicillin-clavulanate as was used in the pediatric study where a clear benefit was identified.

But, in fact, the FDA and the EMA now both require placebo-controlled trials for the approval of any new antibiotic for the treatment of acute bacterial sinusitis (see our Lancet ID article from 2008).  Imagine the scenario.  You have fever, you have been sick for 10 days already, you have facial pain and you finally drag yourself to the emergency room.  The doctor, when they finally get around to actually seeing you, offers you the possibility of participating in this exciting new clinical trial where you have a 50% chance of getting either a new antibiotic active against resistant bacterial pathogens or an equal chance of getting an identical sugar pill.  What would your choice be?  So, as it stands now, because of this requirement, trust me, no new antibiotics will ever be approved for sinusitis.  Is that a good thing?  I’ll leave that up to you. 

ANTIBIOTIC MARKETS AND SPLU - GUEST BLOGGER – LEW BARRETT

Logo of the . (Photo credit: Wikipedia)

The Neonatal Intensive Care Unit. (Photo credit: Wikipedia)

Lew Barrett is an old friend and colleague of mine from Wyeth.  He was the VP of US Infectious Diseases Marketing when I was there and as such we worked together closely for a number of years. Lew then assumed the role of VP US Marketing and Global Business Manager Infectious Diseases at Wyeth. Lew was, in large part, responsible for the surge in Pip-tazo sales to over $1B.  I asked Lew to help us understand the market implications for the Special Population, Limited Use (SPLU) proposal of the Infectious Diseases Society of America.

I thank David Shlaes for the invitation to share my thoughts regarding the commercial viability of anti-infective drug development in light of recent discussions and pronouncements at FDA and in Congress.  Lots of acronyms, Bills and ideas have been submitted recently in the U.S. to stimulate drug development and approvals: GAIN, SPLUs FAST and TREAT just to name a few. 

Most recently, the concept of SPLU approvals has been discussed.   The hope is that trial design, numbers of patients and time might be reduced.  The approved uses: narrow and limited.  One wonders however how small is small and how fast is fast.  In a paper recently published in Clinical Infectious Diseases [Vol. 54, No. 5, 1 March 2012, Linezolid was compared with vancomycin for the treatment of MRSA nosocomial pneumonia.  The study took over 5 years to complete.  1225 patients were randomized to study 448 MRSA pneumonia patients.  Finding resistant pathogens in clinical studies is tough!  Can I say rapid bedside diagnostics?

So assuming a SPLU’s come to pass what are they worth?  Professional forecasters beware, I am conducting a rough and dirty analysis, but directionally I think it makes sense.

Data Sources:  1.  Decision Resources has published several syndicated studies over the last year.  Their data provides us useful epidemiology insights.  Thanks to several colleagues for help with this information.  2.  T.E.S.T. (Tigecycline Evaluation and Surveillance Trial) http://testsurveillance.com/ is a global multi-center surveillance study designed to assess the in vitro activity of tigecycline and comparators against a range of important pathogens.  Thanks to IHMA and the TEST team for fact checking my analysis.  I used Decision Resources to provide patient numbers, T.E.S.T. to identify % MDR.

My example:

SPLU drug approved for MDR Acinetobacter in the U.S.¹

Infection	Number of US Patients infected with Acinetobacter
HealthCare Assoc. pneumonia	18,500
Nosocomial pneumonia	11,900
Ventilator-Assoc. pneumonia	13,900
UTI	36,500
Blood stream infection	12,000
Complicated skin+Surgical Site infection	202,200
Total Acinetobacter patients	295,000

295,000 Acinetobacter spp. patients.  How many fit the SPLU definition?  Using T.E.S.T.², I calculated the number of MDR Acinetobacter.  My definition:  any isolate resistant to at least 3 classes of antibiotics.  I used:  3G/4G cephalosporins, carbapenems, fluoroquinolones, beta-lactam/beta-lactamase inhibitors and aminoglycosides.  Unfortunately neither colistin nor tigecycline is evaluated.  Colistin because it was not tested, tigecycline because TEST is a Pfizer study and tigecycline is not indicated for nor has any breakpoints for Acinetobacter .  This is a limitation of the analysis. 

I limited Acinetobacter to strains isolated from the urine/bladder, lung, complicated skin/surgical sites, and blood in an attempt to mimic the Decision Resources data.

35% of U.S. Acinetobacter were resistant to at least 3-classes of antibiotics.  

SPLU defined Acinetobacter patients:  103,000 (295,000x32%).

Assuming 100% market share of 103,000 patients for our new drug (not happening):

$100/day x 14 days = $1,400 course of therapy:  $144MM

$350/day x 14 days = $4,900 course of therapy:  $505MM

$700/day x 14 days = $9,800 course of therapy:  $1.0BWhat share of patients is likely?  The limited indication itself, stewardship programs, ID restrictions will all reduce share.  Colistin, tigecycline, combinations of agents and other new drugs (I hope) will also reduce share.  I leave it to each reader to decide what is appropriate, however a generous 50% market share reduces the annual revenue stream to between $72 and $500 million dollars. 

What about a more prevalent pathogen you may ask.  By comparison, 524,000 Pseudomonas aeruginosa infected patients were reported by Decision Resources.  The MDR rate, per T.E.S.T. is 10%.  So we are talking about even fewer MDR P aeruginosa patients, 54,000.    

What about spillover sales or off-label sales.  My personal belief is that price, stewardship programs, formulary restrictions, the label itself and external oversight will limit extraneous use.  Oversight from payors on the hospital side and the government on industry’s side, especially for a new regulatory approval process, is likely.   HHS, OIG, and federal and state attorneys general have been scrutinizing manufacturer’s commercial activities.  One only has to look at fines assessed against Forest, Pfizer, most recently J&J,  and others for marketing activities to verify my point.  J&J’s fines for marketing activities are in the final stages of negotiation. 

Lastly, what happens when an SPLU approval is broadened based on required post-approval studies?  If no new agents are approved to treat the original MDR problem, I suspect that formularies will keep the clamps on use, regardless of any price changes by the manufacturer.  So if the use is going to be constrained I suspect that the price will remain high.  

In summary, SPLU approvals appear intriguing. I believe that SPLU qualifying antibiotics will need oncology-like pricing to be attractive to any sponsor; small pharma, VCs or big-Pharma. If combined with extensions to exclusivity and/or tax credits even more so.  But, SPLU approvals may be more attractive to small or start-up companies versus big pharma.  Big Pharma still has the issue of resource allocation across various projects; a faster, limited approval may not meet the threshold for investment in the big pharma portfolios.

1.    Decision Resources:  Hospital Treated Infections, November 2011.

2.    T.E.S.T.  Tigecycline Evaluation and Surveillance Trial.  Data run 16March2012.

Lewis Barrett, President & Owner

LLBarrett Biopharmaceutical Consulting, LLC

LLBarrett3@Verizon.Net

LinkedIn:  http://www.linkedin.com/pub/lew-barrett/10/b68/833

LL Barrett Biopharmaceutical Consulting provides strategic consultation to the global life sciences field with a particular focus on brand strategy (positioning, differentiation, global branding and access); lifecycle strategy, business development, and strategic communications. Mr. Barrett has a breadth and depth of experience in the anti-infective, hospital and biopharma fields.

The Infectious Diseases Society Steps Up!

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Yesterday was a big day for news on the antibiotics front.  The Infectious Diseases Society of America (IDSA) presented testimony to support reauthorization of the Prescription Drug User Fee Act (PDUFA) whereby certain incentives for antibiotic R&D would be included.  Their testimony and press release are provided here by links.

To me, by far, the most important aspect of their testimony and the subject of the press release is FDA reform.  They clearly point out, in no uncertain terms, that the lack of feasible trial designs to meet FDA requirements is undermining our ability to bring forward new and needed antibiotics.  The entire quote from this section of the IDSA testimony is shown below.

One solution proposed by IDSA is a good one, but one that, in my view, will still have very limited applicability to expanding our antibiotic pipeline.  They propose a pathway they call “Special Population, Limited Use (SPLU).”  This hearkens back to Mark Goldberger’s 2002 call for trials showing high quality but low quantity. In fact, this idea has been discussed both within and outside the FDA for at least the last decade.  It would involve invoking subparts E and/or H of the FDA regulations to allow exactly this – approval of drugs targeting limited populations with high medical need.  In the case of antibiotics, this would be those patients with serious infections caused by pathogens resistant to either all approved antibiotics or all but two last line agents such as say tigecycline and colistin - where we don’t know that either will work in such infections anyway.  These antibiotics would be restricted to very limited use only in those targeted populations.  A high price could assure that there would not be much off-label use. 

The advantage of the IDSA initiative is that it gets the FDA talking seriously about this approach – something they have failed to do since Mark Goldberger.  Another very positive aspect is that it may provide a pathway for some new antibiotics.  I can only think of two possible candidates for this approach today.  One is the Pseudomonas-specific antibacterial peptide from Polyphor.  A second would be if some company ever decided to develop a combination of a monobactam plus a beta-lactamase inhibitor similar to avibactam that could be used to treat infections with most metallo-beta-lactamase producing organisms including NDM-1.

Even for these examples – the devil will be in the details. 

Here is what Janet Woodcock said – “A company might be able to test a product on 400 patients rather than 8,000 to get it on the market. But it could only be used for a very limited group of patients with life-threatening antibiotic-resistant infections for which other medications are not available, not widely for off-label uses.”  But of course no antibiotic is ever studied in 8000 patients to begin with (or almost never) and enrolling 400 patients with serious infections with MBL-producing strains will be next to impossible in any kind of reasonable time frame.  Other questions include that of the indication.  Can one enroll patients with infections at any site including the urinary tract?  Will UTI patients be excluded?  Is it OK to lump skin and soft tissue infections with pneumonia as might be required to study patients with Acinetobacter infection?  Is mortality the endpoint or is it cure (I believe mortality will be very challenging and highly confounded as an endpoint).

For other antibiotics with broader spectrum or targeting more general populations will this “new” pathway allow for more rapid entry to market?  I’m not sure.  For example, is it much faster to develop it for these rare infections and get an early approval, begin to accrue revenues and then study the drug for a broader indicaton?  In that case, you would start out at a very high price then lose both your pricing advantage and the SPLU designation after approval for a more traditional indication like UTI or intra-abdominal infection for example. I am not convinced that the timelines fit here and that this makes any sense - hence my belief that SPLU will benefit a very small number of drugs.

 Another aspect yet to be determined is the NPV for the companies for an SPLU drug.  Clearly the price could be high, but will the number of patients treated provide a return on investment under these circumstances?  I would need the help of a marketing person to sort this out and I will seek such help and provide a follow-up to this blog soon.  At the end of the day – large pharma may be willing to forgo profits for an SPLU antibiotic.

In conclusion – this is an important initiative by the IDSA. I am skeptical that the FDA will be able to make even this key initiative feasible on planet earth. I believe that if the FDA can make this approach feasible, it will only benefit a very few new antibiotics – but that would still be a very positive step. Finally, I think the jury is out on return on investment – but this may be less important to large pharma in this case. 

Related articles

• Approving Antibiotics - IDSA Submits Proposal (medicalnewstoday.com)