The warning bells about the global threat of the rise of antimicrobial-resistant (AMR) infections and dearth of new antibiotics seem to have been ringing for several years now. However, the prospects of companies developing new antibiotics, buoyed by regulatory incentives and grant funding, should on the face of it be an attractive proposition for investors. Added to this, the market for novel therapeutics targeting AMR is large with so-called superbugs expected to be responsible for the deaths of more than 10 million people annually by the time 2050 rolls around.

Unfortunately, the reality is that companies in this space are struggling with investor sentiment hitting an all-time low. As a group, public antibiotics companies have endured a very tough year with the BioWorld Infectious Disease index down over 31% year-to-date with just a few more trading days left before the end of 2019. (See BioWorld Infectious Disease index, below.)

Deep divide

The deep divide between antibiotics R&D and market pull has already claimed antibiotics innovator Achaogen Inc. that was forced to file for Chapter 11 bankruptcy nine months after the U.S. launch of its new antibiotic, Zemdri (plazomicin) to treat complex urinary tract infections and carbapenem-resistant Enterobacteriaceae. As such, it is a much-needed new treatment, which should be on hand when existing antibiotics are no longer effective.

The company’s demise may not be an isolated example, with several other small biotech antibiotic innovators noting in their most recent financial reports that cash resources will only be sufficient to fuel their product programs for one year or much less.

Shares of Morristown, N.J.-based Melinta Therapeutics Inc. (NASDAQ:MLNT), for example, dropped 38% in November after filing its 10-Q filing that included a "going concern" warning. The company reported it had $63 million in cash at the end of September. In October, the FDA approved Baxdela (delafloxacin) for the treatment of adult patients with community-acquired bacterial pneumonia (CABP) caused by designated susceptible bacteria. The supplemental approval followed priority review based on its previous qualified infectious disease product (QIDP) designation. The drug received U.S. approval in 2017 for the treatment of adult patients with acute bacterial skin and skin structure infections (ABSSSI) caused by designated susceptible bacteria. The company’s shares are trading down over 60% year-to-date.

Listing changes

Another antibiotics developer casualty is Motif Bio plc, of New York, that filed with the SEC to delist its American depository shares (NASDAQ:MTFB) and listed warrants from Nasdaq. Its final trading day on the exchange was yesterday.

In February, the company’s stock value collapsed on news that the FDA had issued a complete response letter requesting more liver toxicity data in its NDA for iclaprim, an antibiotic in development to treat ABSSSI caused by gram-positive pathogens.

As part of a proposed subscription and placing to raise $50 million, Oxford, U.K.-based Summit Therapeutics plc intends to cancel trading on the Alternative Investment Market in London but retain its Nasdaq listing. The cash infusion will fund the company until 2021, and support phase III development of ridinilazole in the treatment of Clostridium difficile infections. The orally administered drug is in two parallel trials, with 680 patients in each, testing ridinilazole against standard-of-care vancomycin. The company’s shares (NASDAQ:SMMT) are up 31% year to date.

Narrow trial miss

Shares of Iterum Therapeutics plc (NASDAQ:ITRM) have dropped 47% so far this year. A significant proportion of the decline was due to the Dublin-based firm disclosing its much-anticipated but short of the mark results from a phase III trial called Sulopenem for Resistant Enterobacteriaceae, or SURE 3, testing oral and I.V. versions of the drug in complicated intra-abdominal infections (cUTI).

The study compared I.V.-to-oral sulopenem-probenecid vs. I.V. ertapenem (Ivanz, Merck & Co. Inc.) followed by oral ciprofloxacin plus oral metronidazole. The primary endpoint was clinical response on day 28 in the micro-modified intent-to-treat population. Difference in outcomes turned up at 4.7% with a 95% confidence interval of -10.3% to 1%. Noninferiority to the comparator ertapenem, as decreed by the FDA, required that the lower limit of the difference in the outcome rates be >-10%.

Putting a positive spin on the results, CEO of Iterum Corey Fishman said, “We believe that these top-line results, while narrowly missing the primary endpoint, provide data that emphasize the potential for sulopenem to help address the growing challenge of antibiotic resistance.”

SVB Leerink’s Ami Fadia in a research note said that although “the study missed by a very small margin, it increases the risk of this program.” Based on this assessment they downgraded the shares to market perform and lowered their price target to $4.

The setback may bode well for index member Cambridge, Mass.-based Spero Therapeutics Inc. with SPR-994, undergoing a pivotal phase III cUTI trial that’s expected to read out in the third quarter of 2020. Spero believes SPR-994 has the potential to be the first oral carbapenem antibiotic approved for use in adults to treat multidrug-resistant gram-negative infections. The company’s shares (NASDAQ:SPRO) are tracking up 80% in value so far this year.

Capital flows

Although it has been a tough year for many of the antibiotics developers, index members are still managing to raise cash. In addition to Summit, Contrafect Corp., of Yonkers, N.Y., priced an underwritten public offering of 25.65 million shares at $0.39 each for gross proceeds of approximately $10 million. The company intends to use the net proceeds to fund initiation of its phase III DISRUPT trial of exebacase (CF-301) in S. aureus bacteremia, including right-sided endocarditis, to fund advancement of its portfolio, including IND-enabling activities for an engineered gram-negative lysin directly targeting highly-resistant Pseudomonas aeruginosa, and for working capital and other general corporate purposes. The company’s shares (NASDAQ:CFRX) dropped 18% on the news and are now trading down 66% year to date.

South San Francisco, Calif.-based Assembly Biosciences Inc., which is developing therapeutics targeting hepatitis B virus and diseases associated with the microbiome, closed its underwritten public offering on Monday for gross proceeds of approximately $143.7 million. It intends to use the net proceeds from the sale of the common stock to fund clinical trials, nonclinical studies, research and development and for general corporate purposes.

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