The an­tibi­otics R&D ef­fort is bro­ken. Here's one mar­ket so­lu­tion that might fix it

Any­one even slight­ly fa­mil­iar with an­tibi­otics R&D over the last 10 years would quick­ly agree that the sys­tem is bad­ly bro­ken.

Big Phar­ma — with the ex­cep­tion of Roche — large­ly pulled out of de­vel­op­ment be­cause the mar­gins are low. The hunt now is for block­busters. There are plen­ty of cheap an­tibi­otics to cov­er most of the mar­ket; the niche for new an­tibi­otics re­mains too small to sus­tain any ma­jor ef­fort need­ed here. The lit­tle biotechs left with the li­on’s share find it’s ex­pen­sive, high­ly risky and hard to make pay. And that is not a pret­ty pic­ture.

So now gov­ern­ment of­fi­cials who have been sound­ing the alarm about the grow­ing risk of drug-re­sis­tant bac­te­ria are look­ing to change the way the mar­ket is struc­tured in or­der to lure big­ger and more am­bi­tious play­ers in­to the game.

That was clear in the UK gov­ern­ment’s re­port, out on Thurs­day, which out­lines a plan to de-cou­ple price from de­mand and shift to a more val­ue-based ap­proach, where in­sti­tu­tions pay fees based on their need for new an­tibi­otics. This is quite sim­i­lar to the li­cens­ing ap­proach that FDA com­mis­sion­er Scott Got­tlieb sug­gest­ed months ago.

While em­bed­ded in a host of sug­ges­tions re­lat­ed to on­go­ing ef­forts to bet­ter mon­i­tor and com­bat drug re­sis­tance, the UK re­port urges a new sys­tem ex­plor­ing how to:

De­vel­op and test new mod­els for na­tion­al pur­chas­ing arrange­ments that de-link the price paid for an­timi­cro­bials from the vol­umes sold, us­ing a NICE led health­care tech­nol­o­gy as­sess­ment to sup­port ro­bust stew­ard­ship.

An­a­lysts at Glob­al­Da­ta of­fered a shout-out for the move.

“The UK gov­ern­ment’s de­ci­sion to ex­plore val­ue-based pric­ing for an­tibi­otics rep­re­sents an im­por­tant step away from the tra­di­tion­al ap­proach of di­rect­ly link­ing pay­ments to sales vol­ume—a pric­ing strat­e­gy that does not work well for an­tibi­otics as it con­flicts with stew­ard­ship ef­forts and ul­ti­mate­ly dis­cour­ages the prop­er use of both new and well-es­tab­lished an­tibi­otics,” not­ed their in­fec­tion dis­ease di­rec­tor Christo­pher Pace. “From the com­mer­cial stand­point, a val­ue-based pric­ing scheme could al­so help to stim­u­late an­tibi­ot­ic R&D as com­pa­nies will be in­cen­tivized to po­si­tion prod­ucts for small­er groups of pa­tients where high un­met med­ical need ex­ists, with­out wor­ry­ing about stymieing re­turn on in­vest­ment.”

We know there’s a mas­sive and grow­ing health prob­lem, but the in­dus­try has been deaf to the five-alarm bells that have been ring­ing. And why not? Char­i­ta­ble R&D for ne­glect­ed dis­eases is a branch of re­search all to it­self, where you can choose to spend — or not — as you will. But there’s no mar­ket­ing glo­ry in it.

Some­thing has to change, and maybe gov­ern­ment of­fi­cials are fi­nal­ly find­ing a path for­ward on a crit­i­cal top­ic. Right now, there is no mar­ket so­lu­tion. 

The oth­er so­lu­tion that the UK re­port echoes is a sug­ges­tion that com­pa­nies be as­sessed a cer­tain amount that they can ei­ther spend on an­tibi­otics or pay as a fee to cov­er the ex­pens­es of those who will. We pre­fer find­ing a mar­ket so­lu­tion as the on­ly sus­tain­able way to get re­al R&D pro­grams off the ground and mov­ing fast. 

Is a pow­er­house Mer­ck team prepar­ing to leap past Roche — and leave Gilead and Bris­tol My­ers be­hind — in the race to TIG­IT dom­i­na­tion?

Roche caused quite a stir at ASCO with its first look at some positive — but not so impressive — data for their combination of Tecentriq with their anti-TIGIT drug tiragolumab. But some analysts believe that Merck is positioned to make a bid — soon — for the lead in the race to a second-wave combo immuno-oncology approach with its own ambitious early-stage program tied to a dominant Keytruda.

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UP­DAT­ED: Leg­end fetch­es $424 mil­lion, emerges as biggest win­ner yet in pan­dem­ic IPO boom as shares soar

Amid a flurry of splashy pandemic IPOs, a J&J-partnered Chinese biotech has emerged with one of the largest public raises in biotech history.

Legend Biotech, the Nanjing-based CAR-T developer, has raised $424 million on NASDAQ. The biotech had originally filed for a still-hefty $350 million, based on a range of $18-$20, but managed to fetch $23 per share, allowing them to well-eclipse the massive raises from companies like Allogene, Juno, Galapagos, though they’ll still fall a few dollars short of Moderna’s record-setting $600 million raise from 2018.

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As it hap­pened: A bid­ding war for an an­tibi­ot­ic mak­er in a mar­ket that has rav­aged its peers

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.

Drug man­u­fac­tur­ing gi­ant Lon­za taps Roche/phar­ma ‘rein­ven­tion’ vet as its new CEO

Lonza chairman Albert Baehny took his time headhunting a new CEO for the company, making it absolutely clear he wanted a Big Pharma or biotech CEO with a good long track record in the business for the top spot. In the end, he went with the gold standard, turning to Roche’s ranks to recruit Pierre-Alain Ruffieux for the job.

Ruffieux, a member of the pharma leadership team at Roche, spent close to 5 years at the company. But like a small army of manufacturing execs, he gained much of his experience at the other Big Pharma in Basel, remaining at Novartis for 12 years before expanding his horizons.

Covid-19 roundup: Ab­b­Vie jumps in­to Covid-19 an­ti­body hunt; As­traZeneca shoots for 2B dos­es of Ox­ford vac­cine — with $750M from CEPI, Gavi

Another Big Pharma is entering the Covid-19 antibody hunt.

AbbVie has announced a collaboration with the Netherlands’ Utrecht University and Erasmus Medical Center and the Chinese-Dutch biotech Harbour Biomed to develop a neutralizing antibody that can treat Covid-19. The antibody, called 47D11, was discovered by AbbVie’s three partners, and AbbVie will support early preclinical work, while preparing for later preclinical and clinical development. Researchers described the antibody in Nature Communications last month.

Pfiz­er’s Doug Gior­dano has $500M — and some ad­vice — to of­fer a cer­tain breed of 'break­through' biotech

So let’s say you’re running a cutting-edge, clinical-stage biotech, probably public, but not necessarily so, which could see some big advantages teaming up with some marquee researchers, picking up say $50 million to $75 million dollars in a non-threatening minority equity investment that could take you to the next level.

Doug Giordano might have some thoughts on how that could work out.

The SVP of business development at the pharma giant has helped forge a new fund called the Pfizer Breakthrough Growth Initiative. And he has $500 million of Pfizer’s money to put behind 7 to 10 — or so — biotech stocks that fit that general description.

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Bris­tol My­ers is clean­ing up the post-Cel­gene merg­er pipeline, and they’re sweep­ing out an ex­per­i­men­tal check­point in the process

Back during the lead up to the $74 billion buyout of Celgene, the big biotech’s leadership did a little housecleaning with a major pact it had forged with Jounce. Out went the $2.6 billion deal and a collaboration on ICOS and PD-1.

Celgene, though, also added a $530 million deal — $50 million up front — to get the worldwide rights to JTX-8064, a drug that targets the LILRB2 receptor on macrophages.

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Mer­ck wins a third FDA nod for an­tibi­ot­ic; Mereo tack­les TIG­IT with $70M raise in hand

Merck — one of the last big pharma bastions in the beleaguered field of antibiotic drug development — on Friday said the FDA had signed off on using its combination drug, Recarbrio, with hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia. The drug could come handy for use in hospitalized patients who are afflicted with Covid-19, who carry a higher risk of contracting secondary bacterial infections. Once SARS-CoV-2, the virus behind Covid-19, infects the airways, it engages the immune system, giving other pathogens free rein to pillage and plunder as they please — the issue is particularly pertinent in patients on ventilators, which in any case are breeding grounds for infectious bacteria.

RA Cap­i­tal, Hill­house join $310M rush to back Ever­est's climb to com­mer­cial heights in Chi­na

Money has never been an issue for Everest Medicines. With an essentially open tab from their founders at C-Bridge Capital, the biotech has gone two and a half years racking up drug after drug, bringing in top exec after top exec, and issuing clinical update after update.

But now other investors want in — and they’re betting big.

Everest is closing its Series C at $310 million. The first $50 million comes from the Jiashan National Economic and Technological Development Zone; the remaining C-2 tranche was led by Janchor Partners, with RA Capital Management and Hillhouse Capital as co-leaders. Decheng Capital, GT Fund, Janus Henderson Investors, Rock Springs Capital, Octagon Investments all joined.