The infectious disease space is one of high unmet need. However, this particular market segment carries an additional challenge: drug resistance.
PHOTO: Courtesy of Genomind
As in other disease areas, the infectious disease space is one of high unmet need. However, this particular market segment carries an additional challenge: drug resistance. “Two factors drive resistance: overutilization and long links of usage for prolonged periods of time,” noted Ankit Mahadevia, CEO at Spero Therapeutics, a Cambridge-based biotech focused on treatments for multi-drug resistant (MDR) bacterial infections. “While all drugs will eventually build a resistance, choosing the appropriate populations and using them in the right way helps to delay the onset of resistance.”
The importance of developing antibiotics to stay ahead of the bacteria has been manifested through some recent steps to support the progress of research in this area. CARB-X, part of Boston University, was awarded US$250 million in 2016 following a call under the U.S. presidential CARB process for a biopharmaceutical accelerator to support companies in collecting clinical data and attracting outside funding. The organization then recruited the Welcome Trust and NIAID, a NIH division, as part of the process – these each contributed US$155 million and US$50 million respectively. “Groups of academics have been researching antimicrobial resistance for decades, but there have been problems on the business side, including the failure of the normal tools of intellectual property and capital formation to solve the need for new antibiotics,” commented Kevin Outterson, CARB-X’s executive director. “As soon as an antibiotic leaves the lab, resistance starts to develop. Furthermore, the more we use the antibiotic, whether in livestock or humans, the further the effectiveness degrades. So, it is a maintenance problem. All other drugs may be viewed as an innovation issue, but in the case of antibiotics, a long-term infrastructure and maintenance stance is required.”
Backed by CARB-X, Spero Therapeutics is addressing several unmet needs in this space. Its SPR994 candidate, the most advanced product in the company’s portfolio and currently in Phase 1 trials, is poised to potentially be the first oral carbapenem approved in the United States and European Union. Commenting on resistance to oral Gram-negative antibiotics used to prevent hospitalization and/or help transition the patient home after hospitalization, Mahadevia commented: “Drugs that once filled this void are now seeing resistance at anywhere from 10% to 15% in the community setting and 30% to 35% in the hospital setting. It is a scary proposition to expose these patients to a hospital setting or prolonged hospital visits where even worse bugs exist. This is a multi-billion dollar market and offers a real opportunity to advance in a space that hasn’t seen a new oral Gram-negative agent in more than two decades.”
Spero’s second group of portfolio products, its Potentiator Platform including SPR741 and SPR206, addresses the growing, deadly group of Gram-negative bacteria in the hospital setting needing an IV therapy. Through progressing its pipeline, Spero expects to transition from a Phase 1 company to a Phase 3 company in the next 12 months.
Since current treatment pathways center on the hypothesis-based testing of the clinician, leading to empirical treatment with broad-spectrum antimicrobials and a lot of lost time and money plus potential resistance, it is clear that better diagnostic methods are also required. There has been an extreme rise in the number of rapid diagnostic tests, which have seen increasing adoption in the hospital setting. This also paves the way for the uptake of more targeted treatments into the marketplace. “Knowledge of the precise pathogen that is infecting the patient will result in physicians being confronted with a choice of whether to give the patient a broad-spectrum antibiotic or a more targeted therapy,” commented Vu Truong, founder and CEO at Aridis, a San Jose- based biopharmaceutical company focused on infectious diseases. “The physician will most likely choose the targeted therapy. Hence, we believe that the industry will shift from conventional, empirical broad spectrum therapies to evidence-based, diagnostic-driven targeted anti-infectives.”
One of the main hurdles in adequately addressing the challenges in infectious diseases has been the reimbursement model. For in-patients in the United States, antibiotics fall under a hospital’s Diagnosis-Related Group (DRG) bill, a bundle payment within Medicare, which also includes the bed, operating room, nursing and other consumables. Hospitals are therefore incentivized to economize on these costs. In the out-patient market, a primary challenge is that consumers have come to view antibiotics as inexpensive. “One statistic illustrates the comparison between oncology and antibacterials perfectly,” highlighted David Martin, chairman at Xyphos. “CAR-T treatment will cost about US$300,000 to US$500,000 per course of treatment – this would be impossible for antibacterials, although both will save lives. In fact, until a few years ago, antibiotics had a higher efficacy and durable response rate than any of the anti-cancer drugs. However, as a society, we have become so used to getting a life-saving drug for pennies. The high price tag for anti-cancer drugs is causing some discussion, but we see much less attention on topics like raising the price of an antibiotic.”
With origins in Avid Biotics, which has now been divided into two companies – Xyphos and Pylum – Xyphos is focused on CAR-T cell therapy, whilst Pylum remains focused on bacterial diseases. Speaking of challenges in finding major investors, James Knighton, now Xyphos’ CEO and co-founder, added: “There are companies in this space with Phase 3 products with a market cap of US$150 million to US$200 million. It would be difficult to find a company in the CAR-T space with a Phase 3 product with a market cap of less than US$5 billion.”
There are a number of proposed solutions to unattractive reimbursement models. “There are a few ways to address such challenges. On the “push” side, there is the possibility for various organizations to fund development,” commented Nima Farzan, CEO at PaxVax, a leading independent vaccine company developing and commercializing specialty vaccines that protect against existing and emerging infectious diseases. “On the “pull” side, we have possibilities, such as forward-purchase agreements or award mechanisms. For a while, Priority Review Vouchers (PRVs) were a very successful mechanism. However, what has happened is that the programs have been expanded, there are many more vouchers out there, and they are selling for a lot less, barely offsetting the development costs. With a success probability of one in five, the reward has to be relatively substantial.”
Other proposals include a substantial market entry award to companies bringing novel antibiotics to market, easing pressure on companies to sell in huge volumes.