In a be­wil­der­ing twist to the long-suf­fer­ing mar­ket for an­tibi­otics — there has ac­tu­al­ly been a bid­ding war for an an­tibi­ot­ic com­pa­ny: Tetraphase.

It all start­ed back in March, when the mak­er of Xer­a­va (an FDA ap­proved ther­a­py for com­pli­cat­ed in­tra-ab­dom­i­nal in­fec­tions) said it had re­ceived an of­fer from Acel­Rx for an all-stock deal val­ued at $14.4 mil­lion.

The of­fer was well-timed. Xer­a­va was ap­proved in 2018, four years af­ter Tetraphase post­ed its first batch of piv­otal tri­al da­ta, and sales were nowhere near where they need­ed to be in or­der for the com­pa­ny to keep its head above wa­ter.

In the field of an­tibi­otics, ap­proval is on­ly the first hur­dle, the big­ger ob­sta­cle is al­ways go­ing to be reap­ing re­turns in the ‘bro­ken’ mar­ket for these life-sav­ing drugs. The long, ar­du­ous and ex­pen­sive path to an­tibi­ot­ic ap­proval typ­i­cal­ly of­fers lit­tle fi­nan­cial gain as treat­ments are typ­i­cal­ly priced cheap­ly and doc­tors — con­fined by hos­pi­tal bud­gets — are steered in­to us­ing old­er gener­ics in their first re­sponse, re­serv­ing fresh, more tar­get­ed al­ter­na­tives for acute cas­es.

Af­ter a healthy 49% se­quen­tial growth in sales the last quar­ter of 2019, in the fol­low­ing quar­ter, Xer­a­va sales grew a healthy 20% to $1.8 mil­lion, but the com­pa­ny con­tin­ued to re­port a loss. Giv­en the tra­jec­to­ry of the drug’s ex­pect­ed up­take, and the ex­pe­ri­ence of oth­er small an­tibi­ot­ic mak­ers (i.e. a litany of bank­rupt­cies), the road to prof­itabil­i­ty was more of a pipe dream than a mat­ter of pa­tience.

And so, like a knight in shin­ing ar­mor, Acel­Rx made its bid, to res­cue Tetraphase from the fire­sale that most of its peers were even­tu­al­ly sub­ject­ed to. Tetraphase agreed to the merg­er.

The deal made the­o­ret­i­cal sense, Acel­Rx sells a painkiller that is ad­min­is­tered in health­care set­tings such as hos­pi­tals, and Xer­a­va is an in­tra­venous an­tibi­ot­ic al­so pre­scribed in hos­pi­tal set­tings. “By com­bin­ing DSU­VIA and XER­A­VA net prod­uct sales un­der one stream­lined cost struc­ture, we be­lieve the com­bined com­pa­ny may re­al­ize both rev­enue syn­er­gies (ac­cess to more ar­eas across the hos­pi­tal to pro­mote both prod­ucts) as well as more ob­vi­ous cost syn­er­gies by re­mov­ing du­pli­ca­tion across op­er­a­tions, es­pe­cial­ly in sales and mar­ket­ing,” H.C. Wain­wright an­a­lyst Ed Arce wrote in a March note.

Then, in ear­ly May, an­oth­er drug­mak­er ap­peared to be court­ing Tetraphase: La Jol­la Phar­ma­ceu­ti­cals sub­mit­ted a non-bind­ing pro­pos­al to swal­low Tetraphase for $22 mil­lion.

Like Acel­Rx, the deal in­clud­ed of­fer­ing Tetraphase stock­hold­ers one con­tin­gent val­ue right (CVR), which would en­ti­tle the hold­ers to re­ceive ag­gre­gate pay­ments of up to $12.5 mil­lion for Xer­a­va in net sales mile­stones start­ing in 2021.

The in­cen­tive with the of­fer from La Jol­la, which has an ap­proved drug for sep­tic or oth­er dis­trib­u­tive shock and an­oth­er ther­a­py un­der FDA re­view for malar­ia, was the rough­ly $2 ex­tra mil­lion in cash up­front ver­sus Acel­Rx’s of­fer.

The Acel­Rx of­fer in March was an all-stock deal. But Tetraphas­es’ share $TTPH price had grown from $1.03 on March 13, the clos­ing price the week­day be­fore the Acel­Rx deal was made pub­lic, to $1.45 on May 7 when La Jol­la’s of­fer was un­veiled.

But Tetraphase had al­ready ef­fec­tive­ly got­ten en­gaged to Acel­Rx — ac­cord­ing to fil­ings, the com­pa­ny would be on the hook for a ter­mi­na­tion fee of $810,000 and/or re­im­burse Acel­Rx for cer­tain ex­pens­es up to $200,000. “We do not be­lieve La Jol­la’s un­so­licit­ed com­pet­ing bid is suf­fi­cient­ly com­pelling to Tetraphase to pull the com­pa­ny away from the cur­rent pro­posed trans­ac­tion, es­pe­cial­ly giv­en the amount of com­mit­ment and pre-close in­te­gra­tion with Acel­Rx to date,” Arce wrote in May.

And then, the plot thick­ened. Weeks lat­er, Melin­ta — a fel­low an­tibi­ot­ic mak­er fresh­ly re­struc­tured un­der Chap­ter 11 and now pri­vate­ly owned by Deer­field — of­fered to buy Tetraphase for $27 mil­lion. And so the game be­gan — Acel­Rx up­ping its of­fer prompt­ing Melin­ta to do the same, and rinse and re­peat. On Thurs­day, Acel­Rx bowed out of the mess, mak­ing a sweet $1.8 mil­lion as a break-up fee, and re­tain­ing the co-pro­mo­tion agree­ment for Xer­a­va and Dsu­via as a keep­sake.

Giv­en the way each deal was struc­tured, Acel­Rx’s last of­fer worked out to about a $35.3 mil­lion up­front deal, while the Melin­ta bid was in the re­gion of $39 mil­lion, ac­cord­ing to cal­cu­la­tions by Arce who called the fi­nal deal “more than fair” for Tetraphase share­hold­ers.

And fair it was — Tetraphase share­hold­ers cheered as the stock jumped about 23% to $2.61 in Fri­day morn­ing trad­ing.

Melin­ta should com­mence a ten­der of­fer for all Tetraphase shares by Mon­day, June 15 — and once the deal is con­sum­mat­ed add a fifth an­tibi­ot­ic to its drug ar­se­nal.

As it stands, the an­tibi­ot­ic mar­ket is cursed — it har­bors the stink of mul­ti­ple bank­rupt­cies, a dearth of in­no­va­tion and is con­se­quent­ly bare­ly whet­ting the vo­ra­cious ap­petites of ma­jor phar­ma­ceu­ti­cal com­pa­nies and most ven­ture cap­i­tal­ists. The Tetraphase deal comes months af­ter bank­rupt an­tibi­ot­ic com­pa­ny Ar­a­digm turned to old part­ner/in­vestor Gri­fols for a fi­nal $3 mil­lion fire sale. Melin­ta it­self filed for bank­rupt­cy in late 2019, on­ly to be swal­lowed by its lender Deer­field.

Blueprint Medicines announced this morning that the second part of its study on Ayvakit in non-advanced systemic mastocytosis (SM) — a rare disease in which a type of white blood cells known as mast cells builds up — met all endpoints, but the biopharma left key questions unanswered.

In 212 patients, with 141 in the treatment arm and 71 in the control arm, patients who got Ayvakit saw an average 15.6-point decrease in their symptom scores compared to a 9.2-point decrease in the placebo arm at 24 weeks. In an extension study, those on Ayvakit saw their symptom scores drop by 20.2 points by week 48.

GSK has landed a new first from UNICEF — the first-ever contract for malaria vaccines, worth up to $170 million for 18 million vaccine doses distributed over the next three years.

The vaccine, known as Mosquirix or RTS,S, won WHO’s backing last October after a controversial start, but UNICEF said these doses will potentially save thousands of lives every year.

“We hope this is just the beginning,” Etleva Kadilli, director of UNICEF’s supply division, said. “Continued innovation is needed to develop new and next-generation vaccines to increase available supply, and enable a healthier vaccine market. This is a giant step forward in our collective efforts to save children’s lives and reduce the burden of malaria as part of wider malaria prevention and control programmes.”