Superbugs: Resistance Rising Part 3

0:00This BBC podcast is supported by ads outside the UK. This is summer at its peak. Whole Foods Market Summer Fruit Fest is your invitation to eat the season. Fresh, organic, and bursting with flavor. Start your day with peaches and organic blueberries and yogurt. Build a grazing board with fresh fruit, prosciutto, and artisanal cheese. Then fire up the grill with no antibiotics ever, proteins, and fresh produce. Savor the season. Shop Summer Fruit Fest at Whole Foods Market. Hi, I'm Simon Jack. I'm Zing Zing. And together we host Good Bad Billionaire, the podcast exploring how some of the wealthiest people on the planet made their money.

0:40And we are back with a new season from sporting superstars to music moguls and celebrity CEOs. We'll be taking a closer look at the lives and fortunes of some of the world's richest people and asking you to decide if they're good, bad or just another billionaire. Good Bad Billionaire from the BBC World Service. Listen now or search for Good Bad Billionaire wherever you get your BBC podcasts.

1:06You know, I think it's underappreciated in some countries how desperate this crisis is already. The bacterium we target is these carbapenem-resistant Enterobacteriae. It's a very rare infection in the UK. But if you go to Greece, they have in their ICUs a pathogen known as Klebsiella. Already 90 % of Klebsiella in those ICUs are resistant to carbapenems. and carbapenems are the last line of antibiotic defence. So these are patients in intensive care units with serious infections with no antibiotic options. Ten years ago, Greece didn't have CRE, so it can happen very quickly and we're seeing this global spread.

1:42So there is a need to act early in advance of the crisis really being an enormous medical and, of course, national problem. That is, I'm afraid, not news. It's from an interview 11 years ago since when the medical crisis due to carbapenem-resistant Klebsiella has only grown worse. In 2017, the World Health Organization put the bugs into the top critical category of priority pathogens needing new antibiotics. My interview with Kenneth Hillen two years earlier was relevant. He was the CEO of a company that was in the final stages of testing the kind of new antibiotic the world needed. His company, Acaogen, was a small start-up, hoping to fill a space vacated by the big drugs multinationals.

2:31I think the challenge is that the economic model for antibiotics is fundamentally broken. And the reason for that is, first, that for most infections, today's antibiotics can be used, and those antibiotics are generic, so they're extremely cheap. The second thing is that antibiotics are amazing drugs in that they cure infections, and so you only have to use them once. And you only have to use them for a very short duration of time, so perhaps 7 to 14 days. And those things combine to make it very unattractive economically versus, say, cancer therapy, where you can treat a large patient population.

3:09That therapy will be given for extended periods of time, and so the economics of that are much more favourable. So if you're a pharmaceutical company and you're thinking on return and investment as you invest dollars in research and development, it makes much more sense economically to invest those dollars in an oncology programme, a cancer programme, versus a programme for antibiotics, where the return on investment is much smaller. I'm Roland Pease, and the story of Achaogen makes a launching pad for this final episode of Discovery from the BBC World Service, where I'm wondering where our future antibiotics will come from, because Achaogen succeeded.

3:46They brought their antibiotic plasamycin to market. But they also failed. So in broad terms, they invented an upgraded version of a class of drug called an aminoglycoside. And they actually started that work, I'm going to say approximately in the year 2000, because they could see resistance coming. And they said, you know, one of the things we can do in this particular type of antibiotic is make some tweaks that will cause it to escape the resistance. Just give it a bit of extra. Well, right. And you could see how the old drugs had fallen over and you could look for versions that were going to be able to escape that.

4:21And so they spent, I'm going to say, approximately 15 years developing that compound, bringing it to the market. It became registered in the United States, approved in the United States. And because of this whole loop of new antibiotic, we should only use it occasionally, their sales were very, very, very little. and their sales were not enough to sustain the company so that they could pay to have it made. They could not stay in business just to give it away. Just be clear, this was an effective antibiotic. Oh, yeah. It's like many antibiotics. It's good for some people, not for others, but having it as a choice, and it would have been a backup choice.

5:00I'd like to have it. And approved by the US FDA, they did all the studies. and they reach a point where they said, well, we can't stay in business. John Rex, a veteran of the antibiotic business and editor of an international newsletter on antibiotic resistance, AMR News, voices the despair there of a whole community. Acaogen had done what the world asked, had had much of its research budget paid for by the US government and even with those advantages, could not make a profit. And they were merely the first antibiotic developer to fail this way. The contradiction is the world wants new antibiotics, but doesn't want to use them because, as you heard in Programme 1, that opens the door to antibiotic resistance.

5:47Part of the problem is that if you have an amazing new cancer drug, people are going to use it. You know, it gets to the market. If you can reduce the incidence of breast cancer or save mom's life, people are willing to pay. $10 ,000,$20 ,000,$100 ,000 saved her life. Let's do it. Same thing if we had a cure for Alzheimer's. What would that cost? For antibiotics, when you bring a new antibiotic to the market, doctors are very careful with it for good reasons. We don't want to burn through it. We don't want to use it unnecessarily. We don't want to cause resistance. And so they're cautious for the first five years at least, rightly so.

6:26But for the company, they just spent 15 years doing the research, they spent fistfuls of money, and there's hardly any sales for the first five years. And that has resulted in bankruptcy or something close to it for every biotech company that's had an approved antibiotic in the past decade. Kevin Alterson is CEO of Carbex, a government-backed body seeking to turn around the landscape of antibiotic development, and he's long fretted over the economics of the business. According to his sums, those recent failures have cost investors$2.3 billion. It's either bankruptcy or liquidation or distressed sale or some other recapitalization event, which results in the original research and development investors losing everything.

7:17But these aren't every company that made it successfully to approval. So these These are the successful companies and it's not just one or two of the successful companies, it's every one of them. So behind each one of these companies that made it to approval are 30 or 50 that failed along the way because the science is hard. So where's the positive example for an investor? Show me the antibiotic company that I could invest in and I would have made money. So we got the signal that it's time to start otherwise we run late from the first session onwards. I'm super pleased to welcome you all to our 10th edition of this conference, which is the 10th anniversary.

7:59It was with these economic concerns that 10 years ago, the UN had its first high-level meeting on antimicrobial resistance. Kevin Alterson's Carbex was founded to nurture the best efforts exploring new compounds. And European startups founded the Beam Alliance, which just held its 10th conference. And without further ado, I would like to open up the conference and give the word to Florence, the original founder of BIM Alliance. I'm going to start by asking you to close your eyes for a moment. Travel back to 2016, a year when the world... So my name is Florence Sejourney. I'm the CEO of a French biotech company called Aurobac Therapeutics, developing drugs in sepsis, septic shock, and antimicrobial resistance.

8:50And I'm as well a board member and founder of the Beam Alliance. So we are innovators developing strategies to combat antimicrobial resistance. So most of us are small companies, from 5 people to 50 people, sometimes 100, not so many. 90 % of the innovation is in small companies today. We're about 74 companies. united in this association called the BIMRAN, so it means Biotech of Europe Innovating and Anti-Bankerbural Resistance, B-E-A-M, to speak with one voice to the political stakeholders. And also to bring developers from every corner of the globe to conferences like this one, where much of the discussion wasn't science, but finance, how to keep their businesses afloat.

9:40It would also be a good place for investors to find somewhere to put their money. But venture capitalist John Moulton, who keeps a special interest in health research, found their relative absence telling. It's a very, very thin game. Here we're sitting at a big-ish conference. If this was anything else I do in venture capital type activity, there'd be 20, possibly 50, venture capitalists doing their marketing because they can find a lot of targets in a day or two. Here, there's me and one other. That was a real surprise when I realised that was the fact. That shows you how little interest there is in the economics of the business.

10:20Nevertheless, there were companies at the Beam Alliance conference who'd found a way to stay in business. Among them, Paratech, one of the five in Kevin Outterson's list that had faced financial disaster. Its CEO, Evan Lowe, told me about the long development of their antibiotic, omidacycline. So this molecule was synthesized in July of 1996. It went into clinical development in 2004. We restarted phase three development in 2014. And after running three pivotal, large, multi-center, global clinical trials, each at a cost of between 40 and 50 million U.S. dollars, we got the FDA approval in October of 2018.

11:06So do you have any idea how many people have been treated with this? I would say on an estimate that we launched the product in February of 2019 to today, probably somewhere in the range of 40 ,000 or so, something like that. And who's getting it? Individuals with serious skin infections, wounds, post-surgical wounds and infections, and individuals with community-acquired bacterial pneumonia. I've asked this of another antibiotic developer in the past. Do you know how many lives you may have saved? Oh, it's hard for me to estimate. But I would argue that what's very clear about antibiotics is that any infection could lead to death.

11:42So I characterize antibiotics in terms of what's the value proposition for antibiotics. They save lives. And in this case of serious skin infections, especially individuals with diabetes, their wound infections can lead to a deep bone infection called osteomyelitis. And if that's not cured by antibiotics, they can have an amputation. So we like to also say that because we have a serious skin infection that we also save limbs. But my main interest is what had saved Paratech. How had they kept trading on a small market when a Cajun hadn't? When you are in a business where you are in a fight for existential survival each and every day, you have to think really hard about judicious capital allocation.

12:25You can't just on a hope decide that you're going to launch the product and put 150 reps out there and think that you're going to be successful because that's a huge amount of capital. For us, when we launched our product, we put out 20 sales representatives because that's what we could afford. And then when we started to generate revenue, we added five more, 10 more, 20 more. And over time, we were able to build based upon our successes. But that does mean then that your investors have to be patient because in a sense you're presumably not delivering them profit now as you build up the workforce.

13:03Yeah. And Roland, as you know, investors are not patient. But you can't just run in that direction to have profitability as your only marker of success, especially early on in a launch. So you've got to bet in. You have to educate your investors, let them know it's going to take time. and this is what it's going to look like as we continue to be successful. I mean, you gave some pretty brutal numbers during your talk about the reality of being in this business. Just give me a sense of that. Well, you know, if you think about the total amount of capital that we had to raise from the approval forward to today, I would say somewhere in the range of$600 million,$700 million in that particular phase.

13:53If you look at from the time that I took over as the chairman to now to profitability, probably somewhere in the range of nearly$1.4 billion. That's a big commitment. It's a big commitment from our investors. It was a big commitment from BARDA. And it was a big commitment for our team. Because oftentimes when you are in that biotech setting in which it's not clear where your next financing is coming from and you're not in a place where you're profitable, Many people decide that's not a comfortable environment for them and they choose to go and work at another company. We've been fortunate that we've been able to actually find like-minded people who are passionate about antibiotics and passionate about saving lives and saving limbs.

14:35And those are the people that are with us today. So his message was to pace yourself. A reminder, this is Discovery from the BBC looking at the future of antibiotics. On the outskirts of Basel, where the Beam Alliance held its conference, on the Switzerland Innovation Park is another small company, Basilea, that brought to market an antibiotic for serious blood and skin infections and for pneumonia almost exactly a year ago. Its chief science officer, Lawrence Kellenberger, showed me round their facilities. We can have a look at the chemistry lab where you do some chemistry. and then this is a bioanalytical lab where we analyse how molecules are degraded in the body so we can look at blood samples.

15:24So how they react to actual life. Yeah, so how would it fragment and so basic biospecimen that we look at. Like Paratech, Basilea is wary of the cost burden of manufacturing and marketing its antibiotics but seeks another solution. Our model is so we bring it to the market. So we get the approval globally, ideally. And then we talk to partners who will commercialize that drug. And there, the big farmers, they don't put R &D dollars in that field. But if they have a sales force, if they can just add another drug, they get more revenues. They have to share a bit with us as well. But they get more revenues with keeping the same costs, roughly.

16:09And that's how we work. But at the same time, they're going to try and be brutal in the negotiations. They don't want to pay you more than they have to, are they? Yes, but the way it works, there's an upfront usually, but then we get royalty. So we get a percentage of their sales. And the second part of our revenues are milestone payment. So if they reach a certain annual sales threshold, then we get a one-time payment. I mean, one reason I really wanted to talk to you is that in the past 10 years, there's been this litany of stories of people who brought effective, necessary antibiotics to market, and then they've gone bankrupt.

16:52And I don't quite know how you've avoided that. Yeah, because they try to commercialize themselves. So you have two things. You have to maintain a supply chain. You need to keep manufacturing the drug, even if you don't sell a lot, because at some point it expires. And if you sell yourself, commercially sell, you need to build up a sales force, which is expensive. And so you spend much more money than you earn. And this usually doesn't work for a long time. So yes, we spend money to get it to the market. And we have, for most of our antibiotics, like non-dilutive funding from Barla or Carbex. That's basically government support.

17:31It's government support, correct. But when we partner it, we have almost no costs because the costs for the sales force are with the partner and we are cash flow positive from day one, more or less. And that's why we adapted our model, which is, I think, specific for that disease area for antibiotics. The latest antibiotic to be approved, Zolifidacin, was originally developed in-house at AstraZeneca. one of the big pharma companies who've withdrawn from this financially precarious product line. They spun out Entasis Pharmaceuticals with the right to develop that compound. But Entasis needed support to complete the trials and turned to GuardP, the Global Antibiotic Research and Development Project, to back the expensive clinical trial stage.

18:22Shemus O 'Brien is GuardP's Director of Research and Development. So we were responsible for conducting the pivotal phase three study to demonstrate efficacy and safety of zolifidacin against the standard of care comparators. Also additional studies to demonstrate clinical pharmacology in healthy human volunteers and then also to develop a new formulation and develop that right through to what's called a registration or final drug product for the regulatory authorities to say that we're comfortable that product can now go forward into manufacturing. So this is a number of things I mean, it seems to me that there are sort of two barriers, well, possibly three barriers within the sort of the pipeline.

19:06One is coming up with the compounds, which are good. So it's interesting that the money had been spent at AstraZeneca, but they decided they weren't going to go further. And then these clinical trials are exceedingly expensive. I mean, when you supported those clinical trials, these phase three trials, are you able to do it more efficiently than maybe big pharma can? or is it just that you're prepared to foot the bill when they weren't? I think it's a bit of both. We try to do them as efficiently as possible and I think we managed to achieve that with the Zolifidacin project and it's not a standard example because that study was conducted in the middle of the pandemic and that makes it difficult to come up with standard costs which you compare but we were able to conduct the study with fewer number of sites than the normal pharmaceutical company model, if I can say that.

19:59So it's more manageable, in a sense. More manageable. We went for countries with higher burden disease and invested early on in Zyts to be able to recruit. And we believe that's a lower cost model than a pharma CRO-led model. Contractors running it. Yeah. But your question and your point is correct. I think we understand that the cost of clinical trials and particularly late phase development is prohibitive. and that's why we look for a mixed approach. So we look to see whether we can bring funds to the table, but by bringing those funds to the table, we want to see commitment to access afterwards.

20:36And the trials were done in Thailand, I think, and South Africa. I mean, is that because that was one way of controlling the costs? Was it because there's a particular need there or do those two things sort of come together? So yes, they do come together to a large degree, but the priority reason for working with those two countries was prevalence of STI and also particularly in Thailand some concerns of increasing resistance to the standard of care antibiotics. And the GardP model takes the future of antibiotics in an interesting new direction because their particular drive is access to new antibiotics where the need is greatest in the global south.

21:15Hence their interest in Entasis's powerful treatment against resistant strains of gonorrhea, notably rising in Thailand and South Africa, among other countries. But that brings me to the most interesting financial experiment I've come across. Hi, I'm Anand, Anand Kumar, co-founder and CEO of Bugworks Research. We're based out of Bangalore in India, and we are innovating a completely new class of antibiotics. And we're hoping that this can go to people everywhere in the world. Doing the scientific legwork where the need is greatest and hopefully avoiding the pitfalls that conventional Western companies have experienced.

21:54I feel very bad for my peer group companies. Most of them have filed for bankruptcy. Great scientists who have done great work. And, you know, we just get terribly humbled by their experience. However, I can't do the same thing that they did and expect to succeed when they haven't succeeded. 8.2 billion people on the planet, 6 billion plus live in LMICs, the low-middle-income countries, of which India is one of them. India alone has 1.45 billion people with a B. We cannot look at AMR through a Western prism like we have done all these times. We are turning this whole thing on its head. If most of the unmet need is in countries like India and Vietnam and Thailand and China, why not launch first in those countries, put your assets to test on the toughest pathogens, develop good, robust, real-world evidence from those markets.

22:51So I want to go to markets that have a huge burden of AMR so you can save hundreds of thousands of lives. And I want to tell your audience that they think of countries like India and China as poor countries, but with 1.45 billion people, it's many Europe's put together. So you could have 300 million people who are in abject poverty, and you can have 200 million people who may be more well-to-do than people in the United Kingdom. So to find 20, 30 million people who can spend$3 ,000 to$4 ,000 on a new product is not a problem. It was a problem 10 years ago. But in 10 years, countries like India, Thailand, Indonesia, China, their economic thresholds have gone up.

23:34So I'd like to tell the audience that we are not ignoring the West, but we think of launching first in high-burden markets. you'll do good for the world and you can also have a viable business. I would just say that I think we saw during the pandemic with the Serum Institute that was producing vaccines for the whole world. I think this was the first time a lot of people understood the power of Indian biotech. I think you hit the nail on the head, including me, right? When COVID happened and many, many parts of the world could not afford mRNA vaccine, but then India stood up and manufactured billions of vaccines, 2.7 billion vaccinations were given just in India.

24:15And they exported hundreds and hundreds of millions of vaccines to countries that could not touch mRNA vaccine. I myself was so impressed with that and saying, hey, the manufacturing process of a country like India was able to help the whole world. I hope in a small way, if BugWorks succeeds, we will offer this life-saving broad-spectrum antibiotic to the whole world. That's my goal, and that's why we're excited about life. and excited for the prospects of their entirely new kind of antibiotic, BWC0977. It may have a better name soon, but it was unveiled to the world in 2024 and is now in stage one safety trials, backed by GuardP.

24:56The support from GuardP, Carbex and other philanthropic backers is called push funding, giving developers a leg up for their development costs. But everyone in the business says, particularly after the commercial failure of a Keogen, that it's the antibiotics market that needs fixing, that we don't value the product the right way. This is how AMR News' John Rex put it. The trick is that antibiotics have a value that is different from other kinds of drugs. If you've got high blood pressure and you need a high blood pressure pill, you know why you need that drug. And I'll be using it every day. And you'll be using it every day.

25:33For an antibiotic, you would only use it briefly. But even a bigger portion of it is that you might use it by not using it. And I want you to think about that. So antibiotics are a lot like fire extinguishers. Have you used a fire extinguisher today? You might say, well, don't think so. Well, think again. Are you in a building? Do you see a smoke detector? Might there be a fire extinguisher in the ceiling? Is there a fire extinguisher over your left shoulder like the one I'm looking at right now? Yes, indeed, there is. So are you using a fire extinguisher? The answer is yes, you are. You're actually using every bit of it except the part that gets you wet.

26:10But you're counting on it to be there. And so that's the quirky thing about antibiotics. They're unlike any other drug we use. Their value, almost the smallest part of their value is in treating you. Much bigger is being available to treat you so that if I have somebody in my cancer unit who gets a difficult infection, I can put that fire out. I can treat them and it does not spread to their neighbours. If I don't have that fire extinguisher, that infection spreads like wildfire. So treat antibiotics like an insurance programme. Pay in without expecting to get daily use out. This is what people are calling a pull factor.

26:51Make a market mechanism attractive to sellers. And in the UK, that's what they're just launching after a short pilot trial. a subscription scheme paying antibiotic producers£10 to£20 million a year up front for access to their new products, whether they're in use or not. It's what CARB-X's Kevin Outterson has long advocated. Antibiotics have value to society. They're like insurance policies. They're like infrastructure, like bridges and tunnels and roads. They have great social utility that the market system of buying drugs per pill cannot capture effectively. So this is the reason for market failure for antibiotics.

27:36The subscription model in the United Kingdom pays for how it's helping the United Kingdom. It's not based on the number of antibiotics used in the first year. It's based on the fact that the UK health system will greatly benefit over a decade from having these drugs. And so they're willing to pay something now for that longer-term benefit. I've seen it described as a Netflix for drugs. It's a subscription, but the difference between Netflix is that people will binge it on day one. The new series comes out, you watch the whole year. For antibiotics, we're still likely to use a few in year one and more in year two.