Melinta, Part 2 / Bankruptcy is not the end / Post-approval costs for an antibiotic

Dear All,

I realized after sending the note about Melinta’s bankruptcy that I’d failed to be clear on what comes next for the company.  (If you missed it, you can go here for a copy of that prior note.)

In brief, a 27 Dec 2019 press release (link) states that the bankruptcy filing exchanges $140 million of secured claims for 100 percent of the equity to be issued by the reorganized Company pursuant to a pre-negotiated chapter 11 reorganization plan. During the reorganization, Melinta will continue to operate normally without disruption to product supply or distribution. Here are the key excerpts from the press release: “… the Supporting Lenders will consent to the Company’s continued use of its existing cash and cash equivalents, which will provide the Company the liquidity necessary to operate its business in the normal course … including authorization to continue employee wages and benefit programs and pay the prepetition claims of certain critical vendors and honor customer programs in the normal course.”

I am delighted that Melinta has found a way to continue to provide uninterrupted for support these products and this is certainly good news for any patient who needs one of these antibiotics while the company reorganizes! This is different from what happened when Achaogen closed and sold its assets (go here for a summary of Achaogen bankruptcy process; for clarity, Achaogen’s Zemdri/plazomicin was acquired within a few months by Cipla and is now available per the Zemdri website: link), but either way this is a loss for all the investors who have supported the company and these products to date … and does not encourage anyone to invest in antibiotics in the future.

As further context, this is a great time to review the substantial nature of the post-approval costs that Melinta may have faced leading up to its bankruptcy. In brief, it takes significant sales to just keep the product on the market. My rule-of-thumb is that it is typical for a company to need about $350m to reach break-even over the first 10 years on the market: $100m for various regulatory post-approval commitments and about $25m/year to maintain drug supply, implement pharmacovigilance, and so forth. This $350m is really just the bare bones of those post-approval activities and does not include any repayment of the costs that got the company to approval. A more expansive program (e.g., one that looked at a new indication or two) could easily need $500m to reach post-approval break-even.

For those not familiar with this important topic, I would encourage you to review the videos on post-approval costs from the 3 Sep 2019 ASM-ESCMID Bootcamp on post-approval economics. Here are all the links in sequence to the clips on Youtube (please note that the clips do not automatically play in sequence and you will need to manually run them in order). You could also find the talks by searching for “Post-Approval Economics for New Antibiotics” on Youtube (link). The full running time for the whole set is about 2h and is well worth your time.

These talks are noteworthy because the speakers have had recent direct experience with antibiotics in the marketplace and have shared real numbers from their personal experience. For each talk, I provide a paraphrased key quote to give you a sense of the content:

  • Introduction (Ryan Cirz, link): “The moment a drug is approved, it’s worth a lot less than zero dollars.”
  • Costs of post-approval commitments (Kevin Krause, link): “Post-approval regulatory commitments range from $92-222m over the first 5 years after approval.”
  • Costs of a supply chain (Craig Lichtenstein, link): “The supply chain has an infrastructure similar in size to the clinical program, can have a lead time of up to two years, and should be estimated to cost $150-$400m over the first 5 years from approval.”
  • Costs of medical affairs / marketing (Rolf Wagenaar, link). Key quote: “If industry develops a mediocre antibiotic, it won’t be used, but a very good antibiotic won’t be used either.” Of interest, Rolf has also posted a very instructive blog that highlights the key ideas from his talk (link).
  • An integrated economic view (Kevin Krause, link): “Economists would call working in the space an ‘irrational investment.'”
  • Q&A (link)

And in passing, I now realize that I’ve failed until now to share the links to the 2019 ASM-ESCMID Bootcamp videos. These have recently been posted and can now be found on either the CARB-X website (link) or the GARDP REVIVE website (link). The bootcamp topics were “Post-Approval Economics” (as above) and “Understanding the Potential for Antimicrobial Resistance in the Drug Discovery Process.”

As always, many thanks for the feedback on the newsletter … your interest and questions drive the content! 

All best wishes, –jr

John H. Rex, MD | Chief Medical Officer, F2G Ltd. | Operating Partner, Advent Life Sciences. Follow me on Twitter: @JohnRex_NewAbx. See past newsletters and subscribe for the future: http://amr.solutions/blog/

Upcoming meetings of interest to the AMR community:

  • 16 Jan 2020 (Washington, DC): Duke-Margolis meeting entitled (approximately) “improving Payment Policies for Antibiotics.” This meeting will run 10:30am – 4:30pm ET. Go here to register.
  • 21 Jan 2020 (1700-1830 CET, online): GARDP-sponsored webinar entitled “Testing for the potential of emergence of resistance.” Go here to register.
  • 28-29 Jan 2020 (Rockville, MD, NIAID campus): Two-day workshop entitled “Understanding the Biology, Antifungal Resistance and Clinical Implications of Candida auris.” Draft agenda is here and registration is here.
  • 20 Feb 2020 (London, UK): Westminster Health Forum conference entitled “Antimicrobial resistance – coordinating a global response and progress on the UK strategy.” Go here for details.
  • 24 Feb 2020 (London, UK): One-day workshop hosted by Royal College of Nursing and the Longitude Prize entitled “Developing point-of-care diagnostics for urinary tract infections (UTIs): addressing clinical need in the UK.” Register here.
  • 26-27 Feb 2020 (Washington, DC): US PACCARB public meeting. Go here for details.
  • 27 Feb 2020 (1700-1830 CET, online): GARDP-sponsored webinar entitled “PK/PD murine infection models: Focus on study elements, variability, and interpretation of results.” Go here to register.
  • 1-6 Mar 2020 (Il Ciocco, Tuscany, Italy): Gordon Research Conference (GRC) on Antibacterial Discovery and Development: “Now is the time to re-boot antibiotic R&D before it’s too little, too late.” Go here for details.
  • 12-13 Mar 2020 (Basel): BEAM-, Novo REPAIR-, CARB-X-, DZIF-, ND4BB-, ENABLE-supported (among a long list!) Conference on Novel Antimicrobials and AMR Diagnostics. Details are here, poster deadline is 12 Dec 2019.  
  • 16-17 Mar 2020 (London): BSAC Spring Conference entitled: “Bridging the gap between science, policy and effective antimicrobial use.” Go here for details. 
  • 18-21 Apr 2020 (Paris): Annual ECCMID meeting (#30)
  • 25-30 May 2020 (Rotterdam), Annual ESPID meeting (European Society for Pediatric ID, #38)
  • 18-22 Jun 2020 (Chicago), ASM Microbe 2020. Go here for details.
  • 27-28 Jun 2020 (Bryant University, Rhode Island): Drug Resistance Gordon Research Seminar entitled “Mechanisms and Approaches to Overcoming Drug Resistance in Cancer, Infectious Disease and Agriculture” for graduate students and postdoctoral scientists. Go here for details … this immediately precedes the GRC listed just next
  • 28 Jun-3 Jul 2020 (Bryant University, Rhode Island): Gordon Research Conference (GRC) entitled “Strategies to Disrupt Drug Resistance in Infectious Disease, Cancer and Agriculture.” Go here for details.
  • 1-4 Sep 2020 (Dublin): Annual ASM-ESCMID Conference on Antibiotic Development #5! Mark your calendar now and go here for details.
  • 9-10 Sep 2020 (Washington, DC): US PACCARB public meeting. Go here for details.
  • 22-25 Sep 2020 (Albuquerque, New Mexico): Biannual meeting of the MSGERC (Mycoses Study Group Education and Research Consortium). Save-the-date announcement is here, details to follow.
  • 17-25 Oct 2020 (Annecy, France): Interdisciplinary Course on Antibiotics and Resistance (ICARe). This is a soup-to-nuts residential course on antibiotics, antibiotic resistance, and antibiotic R&D. The course is very intense, very detailed, and gets rave reviews. The date is set for 2020 and the program will ultimately appear here. Registration is limited to 40 students and opens 15 Mar 2020.
  • 10-13 Apr 2021 (Vienna): Annual ECCMID meeting (#31)
  • 3-7 Jun 2021 (Anaheim), ASM Microbe 2021. Go here for details.

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