Antibiotics in 2012

It is always risky to get into the business of predicting the future.  But, to a certain extent, its what we all do for a living.  So this year, I tried to put a few thoughts together on what might happen in 2012.  I was also spurred by a summary of the ICAAC meeting published in Microbe Magazine where Jeff Fox contrasted my optimistic evaluation of the antibiotic pipeline to my “gloomy” blog.

The FDA –

It seems like the FDA has finally understood that they cannot continue to issue guidance documents requiring infeasible trial designs.  What is less clear is whether they understand what “feasible” means to clinical developers and to industry. I am going out on a limb in predicting that rather than issue design requirements that are unworkable for urinary tract and intraabdominal infections, the FDA will delay guidance documents on these indications until they have a more clear idea of what will and will not work.   If they don’t take this step, it will mean another several year cycle of unworkable guidance, additional workshops and advisory committee meetings and limbo for the industry leaving the US in an even less relevant position than it is today.  Such a misstep will leave the new drugs for Gram negative infections now in or entering pivotal trials in these very indications in some FDA neverland but on relatively solid ground in Europe and everywhere else in the world.  I don’t think that is where the FDA wants to be.  So I’m predicting that they will avoid such an outcome.

I also predict that the FDA will try and achieve some understanding of pharmacometrics and how these methods can be used in various ways including as methods to define treatment effect for clinically relevant endpoints in various infectious disease indications.

I predict that the FDA will not come forth with a re-evaluation of generic antibiotics in terms of their risk to benefit ratios in spite of their promise to do so in 2006.

Innovative clinical trial designs –

I predict that the first truly innovative trial designs for antibiotics will be implemented in 2012 including superiority trials possibly even using adaptive Bayesian designs. Pharmacometrics will play an important role in the design of such approaches.  These novel designs will be negotiated first in Europe with the US playing a distant second fiddle to the European regulators.

The markets -

2012 will be the year where the payor in mature markets begins to understand the value of antibiotics compared to high-priced drugs that only prolong lives weeks to months.  Whether this will result in price adjustments for antibiotics already on the market – I doubt it.  But prices for new drugs that offer clear advantages over generics or other marketed brand antibiotics will achieve higher prices.  If these are supported by superiority data, such value will be easier to justify.

2012 will also see continued if slowing growth of antibiotic revenues in the emerging markets.  Pressures from the global recession and internal economics will provide a braking of the rapid growth of the middle class in these economies and therefore will slow the growth in demand for branded antibiotics.

The pharmaceutical industry and antibiotics –

I predict that we will see continued evolution among the large pharma companies with divestitures to shrink these behemoths and with additional cost cutting M&A in 2012. 

I predict that 2012 will see a continuing equilibrium at our current low point of only three large pharma companies truly engaged in antibiotics R&D. The three today are AZ, GSK and Sanofi (just getting back into the game).  Novartis will remain schizophrenic with their discovery group fully engaged and their pharma group not so sure.  Merck will continue with their slow, small program that is not large enough to really count.  Any of these companies could depart the antibiotics arena at anytime, but several large companies are currently reconsidering the field and may even get back in attracted by market opportunities in the emerging economies.

I also predict that we will see continued emergence of small pharma along the lines of the Cubist model.  Examples will be Trius and possibly Rib-X.

Biotechs developing antibiotics will continue to struggle.  Those that have novel compounds active against resistant Gram-negative pathogens will be in the best position.  Those with newer versions of older antibiotics targeting mainly Gram-positive or even Gram-positive and respiratory pathogens will have a more difficult time providing an exit for their investors.

Finally – regardless of where you are in the antibiotics world – I wish you a happy, healthy and prosperous 2012. 

Its not just big pharma

In several previous blogs I have written about dysfunctional aspects of large pharmaceutical companies.  Today I want to explore the foibles of small companies.  One of the great potential advantages of small companies is that your colleagues and your CEO are just down the hall.  One of the great potential disadvantages is that your colleagues and your CEO are just down the hall. Today, I would like to share a few anecdotes and some speculation with you in regard to dysfunction on the biotech side.

One company had a founding scientist as their CEO.  He is a brilliant antiviral biologist with an exceptional understanding of antiviral drug discovery and development.  He surrounded himself with an all-star team of executives covering all aspects of discovery and development including process chemistry research and manufacturing. His intelligence and personality allowed him to attract the best and the brightest. But – he had a hard time listening to his all-star team.  Executive meetings became a game of waiting to hear what the CEO would decide rather than any sort of shared responsibility for decision-making.  We all understood that consensus was something that was not going to be achieved.  Decision making was to be top-down.  You can imagine that, given the fallibilities of even the most brilliant, in the long run, this was not good management and led to several avoidable and disastrous consequences.

Another company was also packed with high performing all stars - but they constantly fought and argued.  They did this by email.  Even though their offices were literally a few feet apart, poison emails would fly.  At one point I was copied on all these.  I went down the hall and quietly suggested that the protagonists (antagonists?) try speaking with each other.  When that didn't work, I made weekly meetings between them part of their performance goals! This reduced the poison emails, but did not make a big impact on the underlying work relationship issues. 

Paratek  started with a perfectly reasonable drug, PTK-0796, and was able to bring it all the way through phase II development.  But in doing so, they went through four different large pharma partners.  Bayer dropped out driven by a change in their corporate strategy away from antibiotics. Merck departed when the FDA made community infections such as otitis, sinusitis and bronchitis untattainable in the US. Novartis, on the cusp of phase III, after having paid $100 million upfront for a post phase II drug, abandoned ship when they could not negotiate a feasible phase III trial in community-acquired pneumonia with the FDA.  GSK was another dropout in there – but I am not familiar with their reasons for dropping the parnership.  I want to spend some time on the most recent cusp of phase III events.  Here, there may have been an opportunity for the Paratek to reach some negotiated settlement such that they would assume more responsibility for the phase III trials – especially in pneumonia.  Or, where the biotech simply sweetened the deal since the deal was based in large part on being able to register in two indications, skin and pneumonia. Finally, in retrospect, it is now highly likely that a feasible trial in pneumonia could now be negotiated with the FDA.   So – how did Paratek handle the situation with Novartis?  What led to the final dénouement in their deal and where will Paratek go from here? Given the history, I suspect this was a deal broken based on dysfunction on both sides – but I am hoping someone will correct me. The patent clock on PTK is running out.  As far as I can see, there is nothing inherently wrong with the drug and it should be a reasonable addition to our antimicrobial armamentarium for skin infections and community acquired pneumonia.  But at this point, I am beginning to doubt that it will ever see the light of day.

A generally dysfunctional aspect of biotech is their naïve lack of appreciation of real world market conditions. I can’t tell you how many times I hear from biotechs that their anti-infective program is going to address a “multi-billion dollar” market.  True perhaps.  But how many antibiotics ever made over $2 billion in peak year sales?  Augmentin?  Biotechs tend to spend little on market research and they just make the assumption that their drug will be a blockbuster because it is somehow similar to a marketed blockbuster antibiotic.  When they do actually carry out reasonable market research studies, they tend to try and stack the deck such that the data ends up with a bottom line of $1 billion peak year sales. While I think that there are some really attractive antibiotics in development in biotech, there are precious few that will reach this goal.  Yet, these biotechs are completely unabashed in presenting their almost ludicrous market estimates to sophisticated large (or even modest-sized) pharma commercial organizations. I even warned one of them recently that if they did this they would be laughed off the stage – and they were!

 

Another area overlooked by biotech is manufacturing.  Early on, this is not necessarily a high priority.  But as soon as you start getting ready for preclinical and clinical development – this becomes absolutely key.  Many biotechs spend unnecessary time and money playing catch-up here.

So large pharma certainly does not have an exclusive license to dysfunctionality.  I could go on with more stories and anecdotes – some really shocking – but I better not.

Have a Great Holiday all those of you out in Blogland!

Antibiotics and Contraceptives

The big news this week was that Kathleen Sibelius, Secretary of the Department of Health and Human Services, overruled Commissioner of FDA Margaret Hamburg on the over the counter sales of a morning after contraceptive (Plan B). That a Secretary of HHS would overrule an FDA Commissioner is unprecedented. Her rationale was that the generics company that made the proposal, Teva, had not studied the drug for safety in children age 11.  Of course, the fact that no other over the counter drug had ever been required to carry out such a study did not enter into the equation.  Neither did the careful scientific review carried out by the FDA which included at least two studies of young teenagers.  Not only that – but President Obama supported the decision of his HHS Secretary overruling his FDA Commissioner.

What does this have to do with antibiotics?  Antibiotic resistance contributes directly to the deaths of about 70,000 Americans per year.  The Infectious Diseases Society of America estimates that the additional cost of antibiotic-resistant hospital infections alone ranges from $21-34 BILLION per year.  While there are many causes for this increase resistance including unnecessary or inappropriate use of antibiotics, most experts agree that we will need to continue to bring new antibiotics to the market to combat a continuing onslaught of resistant bacteria.  In this regard, the FDA has been a major roadblock to progress. They continue to approve fewer and fewer new antibiotics as shown here.  Of course, the lack of approvals is not entirely the fault of the FDA.  Some antibiotics brought to them should not have been approved.  But clearly FDA policies and recent guidance documents requiring infeasible trial designs have been major contributors to our depleted antibiotic pipeline.  While I believe that FDA now recognizes the error of its ways in promulgating requirements for infeasible trial designs for antibiotic development, they are correcting their errors slooooooooowly.  At the same time they are starting to rethink current feasible guidance documents for development of drugs for urinary tract and intra-abdominal infections.  Scary!

Earlier this year I wrote an open letter on this very topic to Secretary Sibelius on this blog.  I am sad to say that I got no response.  It is clear to me that contraceptive use and sex are fields with popular “interest,” lobbyists and money. It is an election year. Antibiotics is not sexy, has precious little in the way of lobbyists and certainly doesn’t have any money since most of the large pharmaceutical companies have abandoned the area entirely.  So I guess that neither President Obama nor Secretary Sibelius will be interfering with the FDA’s bumbling response to our desperate need for a full and healthy antibiotic pipeline. . . . .

Big Pharma's Uncertain Future Creates Antibiotic Opportunities

Alex Kandybin and Vessela Genova have written a fascinating piece (you have to register to see the article) for Booz & Company’s Strategy+Business. The piece is entitled Big Pharma’s Uncertain Future – and there is no doubt that big pharma must evolve away from the big blockbuster model.  The question is how?  Which strategy is the best?  Most companies are placing large bets on biologics for the future – both vaccines and, more importantly, biotech (antibody, protein or peptide) drugs. Abbot is splitting – dividing the pharma business from diagnostics and devices. Roche has made a huge bet on diagnostics. Novartis has moved in a big way into the generics and the ophthalmological businesses.

This situation poses both a threat and an opportunity for antibiotics.  In fact – I think there is more opportunity than threat here.  It is clear that big pharma in the future will be less big.  According to the Booz article, the pharmaceutical industry has already shed 150,000 jobs in recent years. Obviously, the threat comes from a continued focus on blockbusters in the new, smaller big pharma model where antibiotics would be excluded from consideration.  But I am guessing that in shrinking through both consolidation and divestiture, antibiotics may once again become a viable therapeutic area for the industry. 

As I noted in my previous blog, the medical need for new antibiotics active against resistant bacteria, especially against Gram-negative bacteria, continues to increase worldwide. This need includes those countries with the most rapid economic and pharmaceutical and antibiotic sales growth rates – the emerging economies of China, India, certain Latin American nations, Russia and a number of Asian and Eastern European countries. This growing medical need plus these growing markets will drive commercial opportunities for antibiotics. As big pharma becomes smaller, new antibiotics with NPVs around $1B will seem more attractive to the smaller entities. The most recent Tufts data suggest that antibiotics cost less to develop and still have higher success rates than products from other therapeutic areas.

I have been hammering this idea for years now. Some smaller “big” pharma will see that antibiotics provide sufficient return on ivestment for the smaller company. For  those giants that are still in the antibiotics game (really just Astra-Zeneca, Glaxo and Sanofi-Aventis as a recent re-entrant), if they ever consider getting out – a spin off of the antibiotics business should look attractive. Another option would be a sale of the antibiotics business. 

So – Pfizer (after their recent departure from antibiotics) still has a chance with its antibiotics remnants. It could elect to sell them to another company.  Sanofi-Aventis might be a good target. The smaller Abbot might also be a good idea.  Or they could spin their anti-infectives molecules out into a new independent entity. They continue to say they will develop them themselves – but seeing is believing. A search of clintrials.gov reveals their new anti-TB drug in phase I – but that’s it. I don’t think Pfizer is small enough yet to see the advantages of antibiotics as a therapeutic area – but as an opportunity for divestiture through either sale or spin off – why not?  Why don’t they see the logic of this?

For other companies that are shrinking – Abbot comes to mind – this might be a good time for an antibiotics company acquisition.  And for Sanofi-Aventis,  a large pharmaceutical company that has seen the error of its ways and is re-entering the antibiotics arena, the same opportunities exist. There are a number of biotechs out there looking to partner late stage antibiotic opportunities.

So – all you shrinking violets out there – lets get busy!

The Perfect Storm Intensifies

The perfect storm hitting the antibiotics R&D has intensified.  According to a recent report by Reuters, the return on investment has fallen by a startling 30% at the world’s 12 largest pharmaceutical companies. The cost of developing a drug through to market has risen from $800 million several years ago to $1.05 billion today.  This rise is mostly due to the increased number of failures – especially late stage failures.  The increase in late stage failures is related in large part to the high regulatory hurdles being encountered across the various therapeutic areas where the industry works. To address this, companies have pared their phase III portfolios from an average of 23 to 18 compounds – a 28% decrease. At the same time, the commercial value of products entering late stage development has increased. Thus, the portfolio prioritization process has narrowed late stage products to those with higher commercial values in most companies. Additional responses from the industry include an insistence on increasing returns on investment.  This is likely to generate additional merger and acquisition activity and further pressure on the portfolio optimization process.  It is likely that this optimization process will place further pressure on antibiotic R&D.

At the same time, a recent report from the European CDC noting a 56% increase in reports of carbapenem resistant Klebsiella pneumoniae between 2005 and 2010.

Resistance to third-generation cephalosporins continues to increase to very high levels throughout the European Community.

The European Union has responded to the crisis of antibiotic resistance with a fairly watered down action plan to member nations. Of the 12 action items in this plan, one is dedicated to the discovery and development of new antimicrobials – shown below.  It calls for the establishment of a public-private partnership under the auspices of the Innovative Medicines Initiative to direct and coordinate academic, non-profit and industry partnerships for this purpose.  But, in the realm of antibiotics, these efforts, so far, have failed to bear fruit with most recent late stage products coming from either large pharmaceutical companies or biotech. Having participated in two framework grants on the industry side, I can only hope that the process for Framework 7 and its successors will be more palatable than that for Frameworks 5 and 6.  As almost a footnote, the action plan calls for implementing procedures for fast-tracking antibiotics against resistant pathogens.  But, as the plan essentially says, these procedural pathways already exist.  The question is how to implement them. The action plan, appropriately in the case of Europe, leaves this to the regulators.  But some more explicit directions would have been helpful.  For example, there should have been a directive to establish feasible pathways for superiority trials leading to early conditional approval. A directive to maintain feasible non-inferiority trial pathways would have also been a welcome addition. While I believe the European regulators already understand this, a clear mandate from the EU would still have been helpful to those of us who want to pursue innovative trial designs for antibiotic development and for the regulators themselves as they try and implement such designs in guidance to sponsors.

While the Perfect Storm intensifies, both the US and EU still fail to address the key issues.  Feasible regulatory pathways forward are the first giant step forward. I can only hope that the EMA will succeed in maintaining feasible procedures and promulgating the new,  innovative and feasible guidance that I know they seek for the development of new antibiotics.

Antibiotics and Innovation at the FDA

In October of this year, the FDA released a report entitled, “Driving Biomedical Innovation: Initiatives to Improve Products for Patients.” There are a number of interesting aspects of this report.  The first is that the word antibiotic is only mentioned once – in a paragraph talking about clinical trails for targeted therapies. But the study of antibiotics in clinical trials has at best only rare and controversial attempts to do just that.  One was the use of emergency use programs to approve the use of linezolid (Zyvox) and quinupristin-dalfopristin (Synercid) for the treatment if serious infections caused by vancomycin-resistant Enterococcus feacium. One major advantage of these emergency use programs is that patients enrolled were documented to have or were very strongly suspected of having a resistan enterococcal infection at the time of enrollment. But given the non-comparative nature of the trials and the bias introduced by the emergency use approach, the FDA has indicated that they would never approve another antibiotic in this way again.  But if not, then how?

The following excerpt is taken directly from the FDA report:

The early discovery of a potential

breakthrough therapy raises ethical and

trial design issues. It is important to gain

confidence that the effects seen in the early

trials are real, and to understand the safety

risks of the new drug. On the other hand,

from an ethical standpoint, it is important to

make sure that people with serious diseases

are getting the best possible therapy. In these

situations, the clinical trials for the drug’s

development must be compressed and the

evidence about its effects gathered in the most

efficient manner possible; however, there is

not a good understanding in the biomedical

community about how to accomplish this.

Additionally, there are questions surrounding

the use of an expedited drug pathway, such as:

• Can FDA, drug developers, and

investigators agree on a threshold to

determine when a treatment poses

“exceptional promise” and should thus

be treated in an expedited fashion?

• Can seamless drug development programs

be created to utilize natural history

data or adaptive trial design concepts to

compress drug development time?

• What are the ethical issues involved in

identifying a promising intervention?

How should the needs of all patients with

the disease be balanced against the need

for better therapy for an individual?

• Can surrogate outcome measures that

could be used for accelerated approval

be rapidly identified?

• Can we arrive at a consensus view of

the goal of monitoring commitments

companies will make once a product is

on the market after such a development

program, such as scientific expectations

and timelines?

These are all great questions.  I can’t wait to hear the answers!

In other sections of the report, the FDA discusses their intent to better communicate with small business. While I am excited about this initiative since the FDA indicates that it wants to improve their understanding of the challenges faced by small businesses, I wonder whether the FDA will actually be able to provide feasible pathways forward for small businesses developing antibiotics.  As it stands now, for example, there is almost no way a small biotech can take on the expense of a registrational trial for antibiotics.  Only truly innovative trial designs will change this.  But given the departure of large pharmaceutical companies and their deep pockets from the antibiotic R&D area, and given the current dismal situation for private funding, we desperately need these biotech to be able to proceed on their own.  A feasible and less expensive pathway for FDA approval would go a long way to bring new therapies, including new antibiotics, to the patients that so desperately need them. 

So – if the FDA is serious about their small business initiative and if antibiotic development is included within this rubric – I hereby volunteer my services. Of course, the problem is that they might not like what they hear.

No matter how one feels about the FDA, their report on initiatives in biomedical innovation is an important one. I think it does indicate a sincere desire to move forward.  But, as always, the devil is in the details.  

Pfizer Abandons Antibiotics R&D in China!

You read it here first!  I first reported Pfizer’s exit from antibiotics R&D back in February of this year. In that report, I noted that they claimed they were moving their antibiotic discovery effort to China  I also expressed doubts that they would ever be able to do that.  I have a source that tells me that they have now announced (at least internally) that they are cancelling their plans (such as they were) to establish antibiotic discovery in China. They still claim that they will continue to pursue what antibiotics they have in development.  I seriously doubt they will be successful there either. My doubts around Pfizer’s confused efforts in the antibiotic arena are based on the following –

• 1.     In firing everyone in their US-based discovery group, they lost all their internal scientific expertise.
• 2.     Antibiotics expertise, including everything from basic science to clinical microbiology to animal model expertise, is required throughout the development process and throughout the period of marketing.  With the loss of this internal expertise, Pfizer is lost.
• 3.     To come to intelligent decision on in-licensing antibiotics, you still need the expertise that Pfizer no longer has.
• 4.     To establish a new group in China, Pfizer needed to hire a scientific leader.  They approached me for recommendations for people to lead the group.  I pointed out that NO ONE in the antibiotic area who knows anything about Pfizer’s history of firing their most valued people would ever trust Pfizer enough to want to work for them. I also noted that they had an opportunity to offer that job to the very talented people they fired earlier this year – an opportunity they ignored.  Who would work for a company like that?

So, I get to say “I told you so” on their failure in China, but I also predict that they will never be able to successfully develop whatever assets they want to move forward since they have lost virtually all their internal expertise.  When Wyeth moved out of antibiotic R&D, they at least had the sense to retain a small core of scientists to support the ongoing development and later marketing of tigecycline.  Pfizer appears not to even have that much foresight – or they just don’t care.

It is all very interesting because I occasionally hear from clients that Pfizer business folks want to talk to them about whatever antibiotic the client may have in various stages of development. But I always warn them that they should take these approaches with a large grain of salt since I doubt, for the reasons noted above, whether Pfizer can even intelligently evaluate an antibiotic in-licensing opportunity.  So far, I have been correct in this assessment.

Of course, this is an incredibly sad state of affairs.  When the world’s largest pharmaceutical company is so incompetent that they bungle their exit from a deprioritized area to this extent, it brings into question the entire management of the company.  I also lament Pfizer’s exit from antibiotics R&D since it is just one less large pharmaceutical company in the fight against resistant infections and it is an additional large number of unemployed microbiologists with industry experience looking for work. Finally, I fear that there will be more competition in the consulting business!