Why developing new antibiotics is a matter of life and death

After multiple rounds of chemotherapy and a bone marrow transplant, she was well on her way to recovery. Then a superbug attacked. Despite her doctors' best efforts, the drug-resistant infection spread to her lungs and her bloodstream. Her chemo-weakened immune system couldn't fight the infection and she quickly passed away.

Sadly, such stories are far too common. Superbugs like this already kill 700,000 people worldwide each year and that annual toll could rise to 10 million people by 2050. This is largely because superbugs are evolving faster than we're creating new treatments; in the past 30 years, only one new class of antibiotics has been approved.

Unfortunately, this drought of new treatments will not end anytime soon, unless policy-makers fix the broken antibiotics market. Right now, drug companies are hesitant to invest in superbug research, since any resulting treatment would only be used in limited, emergency cases. Researchers stand little chance of recouping their costs, much less of earning a profit. Biotech firms and investors like us won't be able to fight superbugs without government assistance.

At Novo Holdings we recently established the Replenishing and Enabling the Pipeline for Anti-Infective Resistance (REPAIR) Impact Fund. REPAIR plans to funnel $165 million to 20 antimicrobial-focused start-ups over the next three to five years. Right now, we are one of the few, if not the only, private investment fund focused on this space. Virtually all other investors have shied away, concluding that the antibiotics market is fundamentally broken. They have a point.

For most drugs, the basic business model is straightforward: firms invest lots of money upfront to develop the therapy, then sell enough of it to turn a profit. This volume-based sales model doesn't work for antibiotics, which can fully cure patients after a single course of therapy. Additionally, hospitals keep the strongest, most advanced treatments under lock and key to prevent bacteria and fungi from evolving and becoming immune to these treatments. Doctors only use these drugs in dire emergencies. This caution makes perfect sense, medically speaking.

But this creates a challenge for researchers and investors. Advanced antibiotics only cost a few thousand dollars – much less than novel cancer therapies, which can cost $500,000 per course of treatment. Even when biotech companies successfully invent new antibiotics, they cannot recoup their development costs given these low sales volumes and comparatively low prices. It's no surprise, then, that a growing number of pharmaceutical and biotech firms are pulling the plug on superbug research. In the last year, three major pharmaceutical companies shut down their antibiotic departments. Medium-size antibiotics research firms like Aradigm and Achaogen have folded in the past year.

Investors are losing hope that antibiotic development will ever generate a return. In 2016, seven antibiotic projects received a total of $173 million in private venture capital funding. In 2019, only two antibiotic projects received funding of $11 million combined. By comparison, 123 cancer treatments have received series A funding since 2017. When it comes to avoiding a global public health catastrophe, novel antibiotics are everything. Yet the market essentially values them at nothing. I believe it's time for a policy-based solution.

The recently introduced Developing an Innovative Strategy for Antimicrobial Resistant Microorganisms (DISARM) Act in the US is a good start. The bill would allow Medicare to offer additional funding to hospitals in the US that responsibly use novel antibiotics. Higher demand from hospitals will help support biotech firms that pursue antibiotic development. DISARM is just part of a package of policy solutions needed to combat superbugs.

Direct financial incentives, such as research grants, would also help. Through CARB-X and the Biomedical Advanced Research and Development Authority, the US government has funnelled more than $100 million in grants toward antibiotic R&D in the last three years.

Public health experts are advising governments to reward companies whose novel antibiotics have already made it to market. Such policies incentivize drug makers by making commercial success more predictable. They also ensure the public only pays for treatments that get off the ground. In an analysis of 30 different types of market incentives, DriveAB, a European organization dedicated to fighting antibiotic resistance, pinpointed market entry rewards as the most impactful way to revitalize research. Despite their great potential, little action has been taken to implement such incentives so far.

Superbugs threaten the public's health. It's time for policy-makers to help fix the marketplace for antibiotics and give constituents access to lifesaving cures.