Big pharma and investors focusing on other segments despite the need for new therapeutics
An industry analysis from the Biotechnology Innovation Organization shows that new antibacterial drugs are not being developed at the rate they should be, and that investors are focused elsewhere.
There have been 164 FDA-approved direct-acting antibacterial new chemical entities since the early 1900s, but only one new molecular target NCE has been approved over the last 35 years. There have been 11 indirect-acting NCEs approved, including seven drugs that work to extend the activity of existing drugs and four monoclonal antibodies specific for exotoxins.
The report states that the current antibacterial clinical-stage pipeline is insufficient to meet the ongoing threat of wide-spread infection from drug-resistant strains. The pipeline contains 54 direct-acting novel chemical or biochemical entities and 10 microbial entities. However, of the non-microbial candidates, 61% have targets for which marketed drugs already exist. More than 38% of candidate programs are indicated for C. difficile and TB, leaving only 44 drugs for other pathogenic bacteria. Only 10 of these 44 candidates have a novel target. There have been 14 indirect-acting NCEs in the clinical pipeline, including nine that work to extend the activity of existing drugs and five monoclonal antibodies specific for exotoxins.
Much of the research has been done by small companies, which have discovered 81% of the antibacterial therapeutics being tested in the clinic. Large biopharmaceutical companies discovered 12%, and small non-profit organizations discovered 7%, of the antibacterial therapeutics being tested in the clinic.
Despite a clinical trial success rate that is more than double the industry average, investment in antibacterial drugs has lagged. Over the last decade, venture cap has invested $1.6 billion in antibacterial drugs compared to oncology’s $26.5 billion. Initial public offerings for 12 biopharma companies brought in $0.7 billion, compare to 109 oncology companies raising $12 billion. This equates to almost 17x less funding of antibacterial vs. oncology companies during this time.
The lack of interest in antibacterial drugs continues to get worse. Clinical trial initiations for antibacterial NCEs declined 33% when comparing the five-year period 2016-2020 vs. 2011-2015. The report states that clinical trial initiations, a broader proxy for R&D investment trends for both large and small antibacterial-focused companies, reinforces the picture of an exodus from antibacterials. Phase I trial initiations declined 46% when compared to the previous five-year periods (2011-2015 vs. 2016-2020). Phase II and III trial initiations declined 33%. The same percentage drop was seen when segmenting by company size, suggesting the wane in large company interest is shared by small companies and their investors. This is particularly concerning as large companies have traditionally been a critical part of the antibiotic ecosystem, with their extensive manufacturing infrastructure and global distribution capacity.
According to the report, there are three main factors that have scared off investors from antibacterial development. First, large companies have been exiting from the space for some time, with very few listed as co-sponsors of small company pipeline candidates. Without a vested interest from large biopharmaceutical companies, licensing deals and M&A dry up, souring the incentive for early-stage investors such as venture capitalists. Second, the majority of recent examples of “successful” biotechs (those that have raised venture capital, obtained funding through public offerings, obtained FDA support via QIDP, and achieved FDA marketing approval) have been commercial failures. Investors point to these recent stories of antibacterial company bankruptcies and acquisitions at fire sale valuations as evidence to avoid investment in this segment of medicine.The third factor is the lack of effective policy and regulatory solutions to address the unique characteristics of the antimicrobial marketplace.
The report authors say that five strategies need to be implemented to strengthen the antibacterial pipeline: More early-stage investment, more regulatory incentives, more late-stage investment, more market-based mechanisms and reimbursement reform.