Superbug Researchers Wait on Future of AstraZeneca Drugs

AstraZeneca Plc (AZN) has some of the most promising experimental antibiotics in development. Even so, it’s thinking of exiting the business.

Chief Executive Officer Pascal Soriot is considering all options for the medicines, including finding more experienced partners to develop them or selling them outright, he said in a telephone interview last week. Soriot is choosing to focus AstraZeneca’s resources on three broad areas where the company is strongest: cancer; heart disease and diabetes; and respiratory, inflammation and immune-system disorders.

A possible takeover by Pfizer Inc. (PFE) is no guarantee of the antibiotics’ development either. The New York-based company has a track record of shuttering such research units, according to Karen Bush, a microbiologist at Indiana University in Bloomington, who led teams in laboratories now part of both AstraZeneca and Pfizer.

The future of the AstraZeneca drugs has implications for doctors’ ability to fight a panoply of bacteria increasingly resistant to existing antibiotics. The World Health Assembly, meeting in Geneva this week, called for new business models to reinvigorate research, as emerging superbugs make diseases such as gonorrhea unstoppable.

“It’s important for the pharmaceutical industry to be motivated to be developing and producing new antimicrobials,” Carmem Pessoa da Silva, a doctor working in the World Health Organization’s drug resistance and infection control team, said in a broadcast interview outside the assembly. “In at least 10 countries, untreatable gonorrhea has already been identified.”

Crucial Time

Public support for antibiotics research couldn’t come at a more crucial time. The WHO warned last month that bacterial resistance may turn common infections and minor injuries into killers within this century. In the U.S., at least 2 million people become infected with drug-resistant bacteria each year, leading to at least 23,000 deaths, according to the Centers for Disease Control and Prevention.

There’s an economic cost, too: about $20 billion in the U.S. alone, Edward Nash, a New York-based analyst for Cowen & Co., wrote in a report to investors this month. The global antibiotics market may be valued at about $44.7 billion in 2016, Nash said.

AstraZeneca, the U.K.’s second-largest drugmaker, has the most extensive antibiotics pipeline among the big pharmaceutical companies, and is tied with Lexington, Massachusetts-based Cubist Pharmaceuticals Inc. (CBST) as leader overall, Nash said in a telephone interview.

Advanced Project

London-based AstraZeneca has spent the last month resisting Pfizer’s 69 billion-pound ($116 billion) takeover offer. If Pfizer succeeds, it might want to keep AstraZeneca’s antibiotics and market them, Nash said. The U.S. company’s strength has always been its sales force, he said. It was also one of the first companies to mass-produce penicillin in the 1940s.

AstraZeneca’s most advanced experimental project is a combination of ceftazidime and avibactam called CAZ-AVI.

“The avibactam combinations could quickly become standard of care in hospitals that have problems with serious infections” caused by drug-resistant versions of bugs such as E. coli and Klebsiella pneumoniae, said Bush, the Indiana scientist.

It’s premature to speculate on the exact research mix because no transaction has been completed, Dean Mastrojohn, a Pfizer spokesman, said in an e-mail.

Pfizer’s Options

“If and when there is, we will be able to speak to specific aspects and details as appropriate,” Mastrojohn said. “Like Pfizer, AstraZeneca has world-class science and scientists. We expect that this transaction would further strengthen the breadth of our pipeline and create a stronger research platform.”

Pfizer may elect not to pursue less advanced therapies, Bush said, adding that the New York-based company abandoned antibacterial programs of at least three companies it bought: Vicuron Pharmaceuticals Inc., Pharmacia Corp. and Wyeth.

“By combining two large companies, I suspect the end result will be whatever little was happening before will be halved as a means of saving costs,” said Peter Collignon, an infectious diseases physician in Canberra who advises WHO on antimicrobial resistance.

At Crossroads

The field was already at a crossroads. Antibacterials fell out of favor as drugmakers pursued more lucrative medicines, such as pills for hypertension and diabetes that need to be taken for a decade or more instead of a week or two. The number of large pharmaceutical companies with active discovery and development programs plummeted to four last year from 20 in the late 1990s.

AstraZeneca said it needed to find partners to develop the drugs even before Pfizer’s pursuit -- a desire Soriot reiterated in an interview on May 14.

Roche Holding AG has boosted optimism that the trend may be reversing. The Basel, Switzerland-based company was one of the first big drugmakers to flee the field 15 years ago. It’s now joining biotechnology companies such as Cubist, which plans to invest about $400 million on research in the area this year.

Two changes have helped make the antibiotics attractive again, according to Alex White, head of the Roche team seeking licensing deals for infectious diseases. One is a 2012 U.S. law, called the Generating Antibiotic Incentives Now or GAIN Act. The law seeks to speed new treatments to market and, once they’re there, protects them from generic competition for an additional five years.

Higher Prices

The other draw for drugmakers is the possibility of pricing specialized antibiotics higher than the versions currently in wide use. U.S. legislation proposed this year would change the payment framework for new antimicrobial drugs.

AstraZeneca plans to seek European Union approval to sell CAZ-AVI, which it’s developing with Forest Laboratories Inc., by the end of the year. Forest is itself in the midst of a takeover by U.S. specialty-drug maker Actavis Plc.

Also in AstraZeneca’s pipeline are medicines for the superbug MRSA, gonorrhea and tuberculosis.

“That’s the big gorilla in the room: will these products actually be developed in a timely way, because these products will make a difference,” said David Shlaes, a former antibiotics executive for Wyeth.

If either Pfizer or AstraZeneca decide to sell the pipeline, Roche should buy it, Shlaes said.

Roche’s pharma research and early development unit, pRED, has announced three small antibiotics deals since November. It’s looking for more, Janet Hammond, head of infectious diseases at the unit, said in a telephone interview before Pfizer’s AstraZeneca approach was public. Roche’s Genentech unit also announced a collaboration last year.

After the Pfizer bid, amid a wave of other industry merger activity, Roche reiterated its strategy of looking for partnerships to bring in new compounds and technologies that could be first or best in antibiotics.

“These guiding principles -- and not the size of an asset -- will continue to drive our activities,” Claudia Schmitt, a spokeswoman, said by e-mail.

To contact the reporters on this story: Naomi Kresge in Berlin at nkresge@bloomberg.net; Jason Gale in Melbourne at j.gale@bloomberg.net

To contact the editors responsible for this story: Phil Serafino at pserafino@bloomberg.net Kristen Hallam, Kim McLaughlin

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