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insights LIFESCIENCELEADER.COM APRIL 2014 46 RESEARCH & DEVELOPMENT insights Antibiotic R&D; Gains Traction: A Mid-Cap Company, Not Big Pharma, Leads The Way B The industry leader in developing antibiotics against "superbugs" and other multidrug-resistant bacteria is not a Big Pharma corporation, but Cubist Pharmaceuticals, headquartered in Lexington, MA. ANTIBIOTIC R&D; GAINS TRACTION: A MID-CAP COMPANY, NOT BIG PHARMA, LEADS THE WAY By C. Yarbrough C A T H Y Y A R B R O U G H Contributing Editor ecause antibiotic therapy is short-term, a company's potential return on invest- ment can be much higher for a chronic disease drug. However, as major pharmaceutical companies began eliminat- ing antibiotics from their core therapeutic areas, bacteria were becoming tougher to treat with existing agents. "The world now faces a perfect storm of a declining antibi- otic pipeline and a rising threat of antibi- otic resistance," said Steven Gilman, Ph.D., executive VP of R&D; and CSO of Cubist. Among the most threatening microbes are Clostridium difficile (C. difficile) and methicillin-resistant Staphylococcus aure- us (MRSA), both of which are targeted by FDA-approved Cubist drugs. In addition to marketing the antibiotic Dificid for the treatment of C. difficile infection, Cubist has developed a new compound, surotomy- cin, against this superbug, which the CDC has labeled as the most threatening of the multidrug-resistant microbes. Surotomycin is under evaluation in Phase 3 clinical trials. Worldwide about 2 million patients infected with the MRSA superbug have been treated with Cubist's flagship product, Cubicin, since its FDA approval over 10 years ago. Cubicin generated $1 billion in worldwide sales in 2013. "Thanks primarily to Cubicin, Cubist's market cap has grown from approximately $1.5 billion in 2008 to approximately $5.5 bil- lion today," said Gilman. In Cubist's pipeline are five compounds, two of which are late-stage antibiotic can- didates. They are tedizolid, which tackles serious Gram-positive infections including those caused by MRSA, and ceftolozane/ tazobactam, which is designed to treat cer- tain Gram-negative infections, such as those involved in complicated intra-abdominal and complicated urinary tract infections. Tedizolid was developed by Trius Therapeutics, which was acquired by Cubist in 2013. Later that year, Cubist submitted an NDA (new drug application) for tedizolid to the FDA and expects a response from the agency in late June 2014. Also in 2013, the company acquired Optimer Pharmaceuticals and its FDA- approved drug Dificid. When it was approved by FDA in 2011, Dificid was the first new drug in 25 years to treat diarrhea caused by C. difficile. SINGULAR FOCUS PROMOTES ACQUISITIONS "Unlike many companies that overdiversify, we have a singular focus, and it's a big fac- tor in why we're considered the acquirer of choice for biotechs in the antibiotic space," said Gilman. "Antibiotic development is so different from drug development in, for example, chronic disease areas such as oncology," he added. "In antibiotics, deep knowledge is required to be able to judge what will be successful. As a result, we understand not only the risk, but, impor- tantly, the equity, the financial value of the company or asset to investors." In addition to the company's in-depth knowledge of antibiotic development, Cubist's track record of success in navigat- ing complex regulatory landscapes and in commercializing drugs has contributed to its reputation as acquirer of choice. "With Cubicin, we have developed a commercial strategy that supports clinical benefits as well as economic benefits for the health- care system," Gilman said. Like other drug developers, Cubist must demonstrate to global payers and provid- ers that a particular new therapy provides clear clinical and economic differentiation. "Because of rising healthcare costs, pricing pressures, health technology assessments, and healthcare reform, regulatory approval no longer is the 'end game' for a new anti- bacterial therapy," said Gilman. "Our clini- cal programs now include multiple health economics and outcomes parameters, such as length of stay in hospitals or readmis- sion rates, to be able to assess overall value, not just clinical efficacy," he said. A NEED FOR MORE R&D; SPENDING This year, Cubist will spend about $400 mil- lion on antibiotic R&D;, "which is believed to be more than any other company in the world," said Gilman. However, Cubist's investment in antibiotic research is not suf- ficient. Industrywide investment in innova- tion as well as appropriate use of antibiotics in certain patient populations is required to stay ahead of the inevitable development of bacterial resistance to antibiotics. "Bacteria simply have too many mechanisms they can use to create new ways of becoming resistant," he said. Gilman also pointed out, "Policy mak- ers and members of the infectious diseas- es community need to face the reality of rebuilding the global antibiotics pipeline head-on and ask: 'How do we attract the kind of long-term capital that will draw small and medium-sized companies into the space?' We think additional incentives 0 4 1 4 _ R D _ C u b i s t . i n d d 1 0414_RD_Cubist.indd 1 3 / 2 4 / 2 0 1 4 3 : 5 9 : 5 9 P M 3/24/2014 3:59:59 PM