Author Topic: Next Generation Antibiotics: Failed business model or Value opportunity?  (Read 6208 times)


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Re: Next Generation Antibiotics: Failed business model or Value opportunity?
« Reply #20 on: January 07, 2020, 07:51:48 AM »
Cigarbutt, thanks for sharing those articles and your thoughts. The article on attributes of an ideal antibiotic is really interesting, and I had not seen that before (using Charlie Munger's inversion principle to get to the ideal antibiotic is nice - we do this with students in class to create an imaginary wonder drug and call is CEFA-KILLEM-ALL). The CDC report confirms the problem is real, and can help get an idea of the total addressable market perhaps more realistically than biased alternatives (media, managements). It may underreport the problem a little because it will only include verified data.

Jurgis, it is interesting that angel investors were pitched too. Publicly traded antibiotic companies are shorted so heavily that staying private is a better idea for sure. 

Backing out from the ideal drug development perspectives, and looking from the value investor perspective, the issue is a broken business model. A modest improvement on current standard of care, either in terms of lesser resistance, lower side effect profile, or ease of delivery (oral versus iv) - is not leading to more prescribing or sales when competing with available options because while resistance is there, is has not geometrically compounded to enough numbers in each center to lead to change in prescribing. This in turn has led to loss of interest from big Pharma, and the small companies crazy enough to be in the space are running out of cash AFTER FDA approval because they can't sustainably bring the drug to market and ramp sales up fast enough to achieve cash flow positivity (trather than be acquired at this stage). The issue in this field isn't just developing new drugs, like we have done for HIV or Hepatitis C, rather it is that the new drugs developed are used so sparingly and for such a short duration that the return on invested capital isn't there unless the business model changes.
« Last Edit: January 07, 2020, 07:53:42 AM by DocSnowball »


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Re: Next Generation Antibiotics: Failed business model or Value opportunity?
« Reply #21 on: January 07, 2020, 02:58:55 PM »
The interesting thing I learned here is that hospitals would not use the new antibiotics as a first line, because genetics are cheaper and they want to save them up as second line defense, in case the first line antibiotics don’t work because of resistance. That’s a tough nut to crack and needs to be rightened with incentives for the developer, otherwise it’s hard to make these drugs commercially viable.

My wife works in dialysis in ER’s and she often also gives antibiotics as IV’s and hospital often go for the generic stuff. She has seen only 3 different ones applied so far. She also thinks there is a whole lot of inertia with doctors or even hospitals.
« Last Edit: January 07, 2020, 03:10:30 PM by Spekulatius »
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Re: Next Generation Antibiotics: Failed business model or Value opportunity?
« Reply #22 on: January 07, 2020, 03:18:18 PM »
I believe the decision of which antibiotic to use goes far beyond the hospital's choice structure. Clinical guidelines dictate that the common, more benign (in terms of adverse events) antibiotics be used first. This makes clinical sense, since less common alternatives should remain less common in order to maintain an armement of backup antibiotics which have not developed resistance. In other words, you need sparingly used backups that will remain with rare associated bacterial resistance, because if bacterial resistance develops commonly to all antibiotics, we all lose and mortality rates skyrocket. Rates of bacterial resistance are related, among other factors, to the rate of usage of the antibiotic in question. So you always need backup options that are sparingly used to protect from resistance. So clinical guidelines and good clinical sense dictate the hierarchy of use less than hospital and pharma incentives. The best likely solution to this is for the US government to see antibiotic resistance is a national health threat and spend federal money to subsidize development of new antibiotics.


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Re: Next Generation Antibiotics: Failed business model or Value opportunity?
« Reply #23 on: January 07, 2020, 06:14:02 PM »
^I would say the business model has not failed in the sense that it is the traditional research that has been running out of magic bullets. The new drugs coming out of conventional research are often minor modifications of previous ones and the microbes are increasingly moving targets. We are losing this race. Because of the diminishing return on each successive waves, newer drugs are not really better or game-changers as they often belong in the periphery of a multi-faceted and evolving picture. Entirely new classes and new mechanisms need to be identified and developed and this is likely to come from unconventional research or fundamental research funded in public institutions.
Although hard to predict, it's likely that this resistance challenge will be met but it would be useful to deal with the misuse issue. Antibiotics are unnecessarily prescribed in 30-50% of cases and nonspecific livestock massive use has to be addressed. Also, even if the general use of antibiotics has leveled to some degree, the percentage of the use of broad-spectrum drugs has risen. This is like going to war and reaching the stage when the most advanced technology is already used. You can always build more bombs but a reassessment of strategy may not hurt and guerilla warfare can be surprisingly effective.