David's New Book

Thursday, February 8, 2018

Who cares about pull incentives?

We do. But no one who actually invests in antibiotic R&D has these incentives high on their priority list or even on their radar screens. They are not yet real, they may never 
come to fruition and they may be poorly devised such that they would stifle rather than stimulate investment.

This week I spoke with three really smart people on the front lines of antibiotic R&D; a CEO of a publicly held antibiotic biotech, a CEO of a privately held antibiotic biotech and an analyst who follows the space closely. I will keep all three anonymous at their request. It is a wonderful privilege to be able to speak with folks like these because you can learn so much from them.  All were unanimous in their responses to my questions.

1.     What is driving investment in the antibiotics space?
The biggest driver is a commercial one.  What are the chances of a successful launch? What is a realistic estimate for peak year sales? When will we achieve peak year sales? Recent antibiotic launches have been dismally disappointing. This lack of commercial success for recent antibiotics has had a chilling effect on mergers and acquisitions in the space. Nevertheless, investors are still willing to support antibiotic start-ups.  They believe that medical need will ultimately drive the market. They are still able to get meetings with large PhRMA. But if current conditions continue, investors will come to understand that antibiotics are not welcome in the pipeline of large PhRMA companies – and we will enter a down cycle of investing.  Some think we have already arrived at that point.

2.     What is the preferred exit strategy for a private investor?
Acquisition! A public market offering is acceptable to some. But the poor performance of recent antibiotic launches is clearly causing hesitation among the few large PhRMA companies still interested in antibiotics making acquisition less likely.  

3.     What kind of product is most likely to lead investors to believe that an antibiotic can be commercially successful?
A product that can be readily used empirically is more attractive.  That is, most likely, a broad-spectrum antibiotic. A narrow spectrum, high priced product or even a broad-spectrum product that has been listed at a high price to encourage use in only resistant infections has not been successful. A broad-spectrum antibiotic that can be sold at a lower price and used empirically but is still active against key resistant pathogens may be the preferred drug at this point. Of course, this may not be best from a stewardship point of view – but there has always been tension between antibiotic stewardship and commercial opportunity for antibiotics. Such a product also has the advantage of a more straightforward development pathway (Tier A/B).

4.     How important are push incentives?
Non-dilutive funding has become an important consideration for investors.  Why?  Because it is real.  There have been a large number of such grants and contracts over the last 5-10 years.  Such grants decrease the investment required to bring a product to a stage where a buyer might be ready to purchase it. This, in turn, increases the potential for investors to achieve a reasonable return on their investment.

5.     What strategies do antibiotic companies need to adopt today?
They need to be ready to launch a product themselves and demonstrate that the product can be commercially successful.  This means raising funds to support phase 3 trials and the subsequent registration and launch of the product. That is, they need to raise $1-300 million. It could partially come from non-dilutive funding as has happened both with the Innovative Medicines Initiative in Europe and BARDA in the US. But investors will also have to kick in a substantial portion of this funding.  It also means that investors – especially private investors like VCs- will have to have a much longer term outlook than they are accustomed to having.

6.     Should small companies merge?
One of the CEOs suggested that mergers among small companies to provide a variety of products might result in a more attractive investment opportunity.  A stable of products decreases overall risk. It would also allow for a more efficient distribution of resources.

7.     Could pull incentives change this calculus?

Possibly. The pull incentive would have to allow for sales and commercial success. Both the transferable exclusivity voucher and a hybrid market entry reward model might meet these criteria. But until these incentives become a reality, investors will not even think about them.

Tuesday, January 30, 2018

Davos and Merck

Its Davos time again – or at least it was last week. During the Davos meeting, the final DRIVE AB report was released where pull incentives were highlighted. A report from the AMR Industry Alliance was also published focusing on the fight against resistance by industry. But at the meeting itself, almost nothing was said regarding resistance and incentives as far as I can tell by looking at the publicly available highlights for the conference.  (Needless to say, I was not there).

The AMR Industry Alliance report was interpreted by some as saying that GSK and J&J are leading the effort in the fight against resistance.  I did not interpret it that way.  The report did say that both companies are opening some of their data to public collaborations – but that does not mean they are ahead in the fight against resistance. In my own view of the industry in this regard, there are companies like Entasis with both strong clinical and preclinical efforts that probably deserve better ratings than GSK and J&J.

One clear message from both Drive AB and from the AMR Industry Alliance was that pull incentives are desperately needed and that, there, no one has seen much progress.  Yes – there has been a lot of writing in many publications, position papers, white papers. Folks like us have been talking among ourselves. My friend John Rex keeps saying that ten years ago we never dreamed we would be having these conversations - and he is right.  But in terms of concrete action – no one is seeing anything.

This brings me to Merck and the recent announcement of the spinoff of many of its preclinical assets in the antibiotic space, Prokaryotics. Wow!  This looks like a good team.  Terry Roemer is leading the science and Keith Bostian is the CEO. I invite you all to look at their website.  BUT – what does this say about Merck? To me it says that with its acquisition of Cubist and its products in the marketplace like ceftolozane-tazobactam, tedizolid and its pipeline compound, imipenem-cilastatin-relebactam, they have had it with the antibiotics space. They do not want to dig themselves a deeper hole. And without clear pull incentives, the rest of the industry is going to follow in their footsteps and of those of the Medicines Company and so many others over the last 20 years.

The AMR Industry Alliance called on all stakeholders to “move beyond statements of intent and to take concrete action to address AMR.”  Amen. Of course, it has not been like there has been no action.  We have a good deal of money for push incentives – take CARB-X as an example. But when it comes to the strategy that will be the most costly and yet is the most desperately needed, pull incentives, we are nowhere.

The antibiotics market is broken. It requires financial intervention in the form of pull incentives to assure the continued availability of new antibiotics active against ever-emerging resistant pathogens. Without this intervention we will all be stuck talking to ourselves on the deck of a very large Titanic.

Thursday, January 25, 2018

Antibiotic Price Perversion - The Data!

Many thanks to Alan Carr of Needham & Co. in New York for providing the IMS data I needed to look at the question of price perversion in the antibiotic marketplace that I discussed in my last blog.

The chart below is based entirely on IMS sales data for the US that has been converted into prescription data.  As such, it has its limitations. The data starts with the April 2015 US launch of Avycaz. Nevertheless, we can see that the overall treatment of carbapenem-resistant Gram negative infections has decreased since late 2016 – consistent with data showing a decrease in KPC Klebsiella infections during this time.

The graph shows that there are 7-9000 CRE infections treated each month in the US and that these numbers decreased starting in mid-2016. Colistin and polymyxin appear to be used for about half of the total patients even after the launch of Avycaz. Avycaz is used to treat about 2000 patients per month.  The rest are treated with tigecycline or other drugs or drug combinations not including colistin, polymyxin or Avycaz. The fact that Avycaz seemed to have little impact on use of colistin/polymyxin suggests that price perversion is real and is adversely affecting patient treatment. Even if some of the organisms treated were avycaz-resistant because of metallo-B-lactamase expression, most would still do better with Avycaz + aztreonam than they would with polymyxin/colistin (in all likelihood).

Even though these data are limited by the extrapolation from sales to prescriptions and from the weakness of hospital recording for these IMS data, they are still likely to show real trends in therapy.  And that, my friends and colleagues, is discouraging.  We should be doing all in our power to avoid treating sick patients with colistin/polymyxin regardless of antibiotic price!


Thursday, January 18, 2018

Antibiotic Price Perversion

I am hoping that readers with access to antibiotic usage data will be able to help here.

One of the legs upon which antimicrobial stewardship rests is to assure that the most efficacious and safe antibiotics are used in the appropriate dosage for the appropriate length of time in the context of any given infection. Based on numerous discussions with infectious diseases physicians, microbiologists and companies over the last 30 years, I believe that this approach to the use of antibiotics is undermined by the pricing within the antibiotics marketplace. 

One can only (with some exceptions) use antibiotics that are available within one’s institution or organization – that is – those that are on formulary. Formulary committees vary somewhat in how they make decisions as to which drugs to make available to physicians and patients, but most take into account clinical data, pharmacoeconomic data, microbiology and price.  They then try and make a value decision. Two factors work against new antibiotics. Generics like colistin are cheap. Most clinical data comes from non-inferiority trials. Pharmacoeconomics and microbiology may act to counter negative factors, but then there is the overall pharmacy budget.  In institutions, regions, and nations where the budget is tight, generics will be favored. Was linezolid favored by antimicrobial stewards for the treatment of MRSA pneumonia – even after it was shown to be superior to vancomycin? I don’t think so. (As I noted in a previous blog, there may have been a number of reasons for this).

One particular comment from a European expert sticks in my mind. We were discussing the issue of value-based pricing for antibiotics.  I was speculating on what the price for a new drug specific for Acinetobacter, for example, would have to be to provide a return on investment for its sponsor.  The discussion was based on a 2013 meeting held by Pew Charitable Trusts. When I mentioned prices ranging from $10,00 to $30,000 per course of therapy, this expert recoiled in disgust saying that in their country they would just continue to use colistin. This was in spite of the fact that at the Pew meeting, insurers had expressed a willingness to cover such costs depending on the data supporting the safety and efficacy of the antibiotic in question. I was shocked – but also na├»ve. This opinion was frequently stated by experts and pharmacists during market studies prior to the launch of Avycaz.

Recently, two antibiotics were shown to be superior to colistin both in terms of safety and efficacy – ceftazidime-avibactam and plazomicin. Of those, only Avycaz is currently marketed (plazo awaits regulatory approval).  A recent prospective observational study of caz-avi demonstrated a 9% mortality in the caz-avi group vs 32% in the colistin group – a 23% reduction in mortality when caz-avi was used as compared to colistin. Most infections treated were pneumonia or bloodstream infections. Renal failure was significantly more common the the colistin group and overall, there was a 64% chance that caz-avi treatment would lead to a better outcome compared to colistin.  A third new antibiotic, Vabomere (meropenem-vaborbactam),  has shown superiority to “best available therapy” (that often included colistin or polymyxin) in the treatment of infections caused by carbapenem-resistant pathogens.    It is now being marketed by Melinta.  

Given that cetazidime-avibactam has now been available globally for a period of time, and given good clinical practice and good stewardship, it should be replacing colistin/polymyxin in terms of prescription volume.  But sales data for 2016 do not yet bear this out.  Apparently, the cost of Avycaz in North America at around $8000 per course of therapy remains prohibitive. Vabomere is priced at about $5000-$10,000 or so per course of therapy as far as I can tell.  I have been unable to examine prescription volumes for these drugs to further substantiate my fear.  But I strongly suspect that the price perversion of the marketplace is leading to continuing use of inferior antibiotics when new but much more expensive antibiotics would be a better choice for patients.

I hope that one of you out there can help research this topic by examining prescription volumes (or by other methods) . . .

I think that all physicians and patients would agree that inferior therapy should not be used for potentially life-threatening infections. The question is – which price are we willing to pay – the price in dollars or the price in lives?

Friday, January 5, 2018

2017 in Review

Once again – Happy New Year to everyone!  2017 was an eventful year and I want to review briefly a few of the highlights (and low lights) for me.

The most worrisome issue that we still face is that of pull incentives for antibiotic R&D. DRIVE-AB has published a summary (this is a link to my blog on this topic) of their recommendations, but their final report originally planned for November is still not available.  Among other options, they highlighted the hybrid model where a market entry award would partially “de-link” revenues from sales volume.  In this model, a company would receive a sum of money on a contractual basis over the first several years after market entry.  At the same time, sales would be allowed to occur and revenues could increase over time. Another model discussed by several experts (see the same blog) was the patent exclusivity voucher approach.  I favor both of these.  The bad news is that NO ONE is making clear progress bringing one of these to reality.   There are more and more papers, reviews and yes, blogs, on the topic but as far as I can tell, there is no concrete action like legislation either here in the US or I Europe that is likely to actually become law in 2018.  But we can always hope.  We should also ACT and keep up pressure on our representatives in government to make this happen.  As I’ve said many times, this is the last frontier!
Linked to the failure to fix the broken antibiotics market, in my view, is the sale of the Medicines Company antibiotics assets to Melinta occurring just after the approval of MedCo's anti-KPC drug Vabormere.  Melinta’s delafloxacin was also just approved in 2017. It remains to be seen what will happen to the outstanding antibiotic research group that was housed within the Medicines Company and that discovered the B-lactamase inhibitor that is part of Vabormere, vaborbactam. I strongly believe that if there had been a market entry reward for which Vabormer would have qualified, the Medicines Company would not have been so quick to jettison their antibiotics assets and their researchers (see my blog on this).

There were a number of developments on the regulatory front in 2017.  I did not blog on all of them – but John Rex is keeping careful track of all these developments. I believe that we will see a guidance in 2018 on the development of antibiotics specific for pathogens like Acinetobacter baumanii and Pseudomonas aeruginosa. John covered the FDA workshop on animal models for pathogen specific antibiotics in March of 2017 for this blog.

The European Medicines Agency is moving from London to Amsterdam.  I am not sure what, if any impact this will have on the way Europe views antibiotic R&D. I worry about this move since I think that the EMA in London has been a shining light for all of us even in the face of the darkness that surrounded the FDA for a number of years. I also worry somewhat about the efforts at harmonization currently gong on between FDA, EMA and other regulatory agencies.  On the one hand, this could be a very good thing and will simplify trial designs for antibiotics.  On the other hand, I am hoping that we can forgo some of the early endpoints that the FDA uses for antibiotic trials in pneumonia and skin infections.  I still favor cure at test of cure as required by EMA as an endpoint here.

The numbers of antibiotic approvals has risen in the last five years.  Whether this will be a sustainable trend or not and whether the drugs in development will truly address the new WHO priority pathogens or not remains to be seen.

A potentially important highlight for 2017 was the paper by Richter et al on how antibiotics enter Gram-negative bacteria and avoid efflux. This was the topic of the blog in May. Richter and coworkers showed that a primary amine was good, rigid was better than flexible and flat was better than globular. Whether these rules will turn out to be universally applicable is not clear – but to me, this was a major milestone.  At the same time, a proposal that I helped formulate to establish a Manhattan Project to attack this very problem, we called it OMEGA, never succeeded in getting the necessary funding to get it off the ground.

In 2017 I saw how physicians face difficult decisions on how to treat highly resistant Gram negative infections every day on hospital wards. The case described in the blog I linked was one where ceftazidime-avibactam was a key component of the therapy that was required for this complicated polymicrobic infection. I am gratified that avibactam plays this role and I only hope that other B-lactamase inhibitor combinations that can be useful, such as aztreonam-avibactam, eventually see the light of day in the marketplace.

I hope that 2017 will mark the beginning of the end for colistin and polymyxin. At least two antibiotics have now been shown to be superior to these drugs that are highly toxic and not very efficacious.  I worry that antibiotic pricing will continue to apply pressure on hospitals and physicians to use these inferior therapies and I will have more to say about that in an upcoming blog.  Stay tuned.

In the meantime, I wish all of you a healthy and happy year to come and I fervently hope that some form of market entry reward becomes a reality in 2018!

Thursday, December 28, 2017

Flu Vaccine - Buyer Beware!

 OK.  This is a little removed from antibiotics.  But I'm still an infectious diseases physician and this situation makes me angry!

Before beginning my story, let’s review a little bit about influenza vaccines. For a long time we’ve known that older patients and those with certain underlying diseases such as kidney failure, diabetes and others had a lower response to many vaccines than young, healthy subjects. One way to deal with this problem might be to give the vaccine in higher dosage.  This has been done with hepatitis B vaccine in patients with kidney failure as one example – and it does work. Very recently, the same strategy was applied to flu vaccine. A high dose vaccine was developed by Sanofi-Pasteur (Fluzone).  In a clinical trial published in the New England Journal of Medicine, researchers demonstrated that the high dose vaccine was 22-45%more effective at preventing flu than regular vaccine in patients 65 years of age or older. Another study examined all respiratory illness occurring during flu season among older vaccine recipients. This study demonstrated a 13% advantage for the high dose vaccine. There are two other new flu vaccines that may also work better in older patients but the data to support that conclusion for those vaccines is much less strong than the data behind Fluzone (see below). So there is at least one flu vaccine available that works better than other vaccines.

This story starts two years ago at an assisted living facility here in Connecticut where my mother was living at the time. During the winter my mother was telling us about several friends who had contracted “pneumonia” and ended up hospitalized. Some never came back.  I asked the administration at the facility which flu vaccine was offered to the residents the previous fall and discovered to my surprise that they did not offer the high dose vaccine to their elderly residents.  The average age there was probably around 80. I then sent them information on the high dose flu vaccine and asked that they offer it to their residents the next year (last year) – and they did. This past spring my mother moved to another assisted living facility in Connecticut. Thinking ahead, I sent them information from the CDC website on the high dose vaccine and asked them both in writing and in person to make it available for their residents this past fall.  In spite of my request, they decided not to offer the high dose vaccine even though I think the average age of their residents is probably close to 75.

That led me to search for pharmacies that would offer the high dose vaccine.  I called three CVS pharmacies in our area. One had the vaccine early on but had already run out by the beginning of November. A second had never ordered the high dose vaccine.  The third had it available. My personal physician also offered high dose vaccine for all his patients age 65 years and older and that’s where we finally went to get our vaccinations. Further inquiries showed that the high dose vaccine was 2-3 times more expensive than the regular vaccines.  But the vaccine is reimbursed by Medicare at a higher rate as well.  My physician’s office staff confirmed that they did not lose money nor make less money giving the high dose compared to regular flu vaccine. But the higher procurement cost may have deterred some providers from ordering the high dose vaccine.

In discussing this situation with friends and with other residents at my mother’s facility, I was surprised to find that no one knew that there was a high dose vaccine and no one knew that there might be an advantage in taking the high dose vaccine compared to any other vaccine. I also called the Connecticut Department of Health and learned that they and no specific policy on which vaccine long term care facilities in the state should offer.  They said that they just go by what the CDC recommends.

 And that brings me to the CDC and Advisory Committee for Immunization Practices (APIC). APIC provides recommendations as to which vaccine should be given to which population in what dosage, when and how often. In many cases, these recommendations serve as guidance for insurers for reimbursement policies especially for childhood vaccinations. In considering flu vaccines, the APIC has decided NOT to make a specific “preference” for the high dose flu vaccine for subjects 65 years of age or older.  As such, state health departments and providers have no incentive to offer this vaccine.  Since procurement costs for the vaccine are higher, they may be reluctant to order the vaccine even though it may be better for their patients and their reimbursement will make up the difference in cost.

I spoke with Dr. Lisa A. Grohskopf who is the CDC’s liaison with the APIC. She explained that there are 13 different influenza vaccines available this season of which two are licensed for use in persons aged 65 years of age and older. They are Fluzone, a high dose killed vaccine, and Flublock, a recombinant flu vaccine also using a higher dose of antigen. Data from various clinical trials are shown in table 3 from this CDC webpage. The best data including a study carried over two seasons and enrolling about 32,000 subjects are those for Fluzone*. The improved efficacy ranges from 22-45% improvement as compared to standard dose vaccines depending on which population you are looking at. The APIC will not provide a specific “preference” for this vaccine because (1) there might be differences across different flu seasons (only two were studied); (2) it was not compared to other high dose or newer adjuvanted vaccines; and (3) it is not clear that the manufacturer would have been able to provide it to a larger popultion.  (I did not speak to Sanofi-Pasteur about this). But to me – this reasoning is specious since there was a large randomized trial showing consistent improvements in efficacy across several different analysis populations in two different flu seasons for Fluzone.  If the objection is that it should have been compared to other high dose or adjuvanted vaccines – that seems unreasonable.  Those other manufacturers should be encouraged to come up with the same kind of data that Sanofi-Pasteur provided in order to get a preference for use in older individuals.

The end result of APIC’s dithering is that no one understands that there is a better vaccine available for older individuals and therefore, that those who need it don’t get it. 

*I did not count the study shown in the table from 2009-10 where the virus circulating was not present in the vaccine and therefore no conclusions about the relative efficacy of the vaccine could be drawn.