• Growing number of large companies exiting antibiotics space
  • Pandemic exacerbates need for new research funding

Venture capitalists are investing far less funds to develop new antibiotics than they are for oncology drugs, according to a new report that highlights the need for more financial incentives to fight off the growing threat of drug-resistant bacteria.

The report, published Monday by the Biotechnology Innovation Organization, found that investors are increasingly shying away from antibiotic research due in part to large companies exiting the space. That’s left small companies, that typically rely on investment capital, struggling to carry out new clinical trials.

Newer antibiotics are more important than ever as the Covid-19 pandemic has forced people into hospitals for longer periods of time, increasing the chances for the spread of antibiotic-resistant germs, the biotech trade group said.

But in the past 10 years, venture capital funding for U.S. antibiotic development amounted to $1.6 billion, compared to $26.5 billion for oncology, according to Monday’s report. The group noted that there are currently 64 new antibacterial therapeutics in the clinical trial pipeline, 80% of which originated from small companies.

“We urgently need new, effective antimicrobial medicines to keep up with evergrowing resistance,” BIO President and CEO Michelle McMurry-Heath said in a statement. More than 1 million people globally died due to drug-resistant bacteria in 2019, she noted.

“Millions of currently treatable infections could become life threatening as the prior innovative advantage over bacteria wanes in the coming decades,” BIO wrote in the report. The group, which represents more than 1,200 companies and organizations involved in biomedical research, said that hospital-acquired bacterial infections in the human gut and lungs are among the most widespread.

The Centers for Disease Control and Prevention throughout the pandemic has reported outbreaks of antibiotic-resistant bacteria at hospital Covid-19 units. Health-care staffing shortages and fewer people getting tested for secondary infections like gonorrhea have made it difficult to monitor the spread of harmful bacteria, according to the CDC.

Investor Drop

The FDA has approved 164 antibacterial new chemical entities since the early 1900s, though only one of these approvals occurred within the past 35 years, BIO said in its report.

That’s because of limited new research on antibiotics to keep up with drug-resistant germs. A growing number of larger companies are exiting the antibiotics space, largely because of limited returns on investment, the report said.

“New antimicrobials will primarily be used as ‘last line’ therapies for use in hospitals when other options are ineffective,” the report said. Novel antimicrobials “are also generally undervalued by reimbursement systems relative to the benefits they bring society,” the group added.

That has resulted in a drop in the number of early-stage investors. Recent antibacterial company bankruptcies and acquisitions have also turned away investors. Biopharmaceutical company Achaogen, for example, filed for bankruptcy in April 2019, less than a year after the FDA approved its antibiotic drug to treat resistant infections.

Funding Incentives

New hybrid funding models that pool money from multiple investors, as well as federal regulatory measures to incentivize investment, are among the solutions that could combat the waning effectiveness of existing antibiotics, BIO said.

The FDA could also update guidance on certain designations and exclusivities given to companies that produce innovative new antibiotics. The Generating Antibiotic Incentives Now Act of 2012 created the Qualified Infectious Disease Product designation, under which 17 treatments are eligible for priority FDA review and an additional five years of market exclusivity.

BIO said in its report that the FDA could assist these drugmakers to address some of the “technical issues with trial enrollment and running large, complex comparative effectiveness studies” that “remain as late-stage obstacles.”

David Thomas, vice president for industry research at BIO, said in a statement that “public policy solutions are necessary to realign market incentives and encourage more innovation.”

“Robust innovation in this space is absolutely critical to tackling the global threat of antimicrobial resistance,” he said.

Read the full Bloomberg Law piece here.