Pharma giants return to antibiotics huddle to launch $1B venture fund — report
Big Pharma exited from the antibiotics space one by one. And now they may be coming back together.
Pfizer, Eli Lilly, Novo Nordisk, Boehringer Ingelheim, Bayer Pharmaceuticals, Merck KGaA and the American Merck — one of the last giants standing — are teaming up to create a $1 billion for-profit venture to bet on small biotechs developing mid-stage antibiotics, Ed Silverman reported for STAT.
Government officials from Germany, Sweden, France and the UK, as well as representatives from Wellcome Trust and Pew Charitable Trusts, will join the companies to announce the initiative on July 9, Silverman wrote. The World Health Organization and the European Investment Bank are also involved in what is being billed as a new solution to the “antibiotic innovation challenge.”
Considering the number of players and the collective heft they bring — plus the fact that the EIB might contribute as much as 10% — the money isn’t much. By pharma standards, $1 billion won’t even buy you a bolt-on deal, typically in the $2 billion to $5 billion range. It also marks the threshold for blockbuster status that any big cancer drug franchise could easily surpass.
Still, millions of dollars could provide a lifeline for biotechs starved of cash, especially in a field that many VCs are staying out of.
Just days ago La Jolla sealed the third — and seemingly final — buyout for Tetraphase and its commercial antibiotic, prevailing over multiple competing bids by AcelRx and Melinta. And even that only cost $43 million in upfront cash and $16 million in potential CVRs.
The key question will be whether the creation of this new venture, which Silverman described as an extension of the work of public-private partnership CARB-X in backing early-stage antibiotics development, will be accompanied by changes in the reimbursement system. At the end of the day, if developers can’t make much money off their drugs, investors may not see a point in trying to help get them approved at all.
As concerns about antibiotic resistance loom ever larger, though, the effort itself may count.
“The thinking is that, ideally, if they put money in [the fund], this will serve them in the long run, but also make them look good,” reads a key quote. “They got pretty bad press when they walked out on antibiotics.”