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In: Opinions & Features

6.8.18 | Forbes

By Steve Brozak

To read the entire article on Forbes, please click here.

Walking around the convention floor at BIO was a remarkable experience this week in Boston.  Not only were there an endless number of human health companies present, there were also animal health companies.  States like Georgia, New Jersey, Maryland, Hawaii were also present, and countries too, among them Estonia, Japan, Switzerland, and Canada was a major sponsor of this year’s conference.  The message at BIO was clear: The world needs biotech.

Not to be overlooked, nestled somewhere between the pavilions for Rhode Island and Amgen was an enclave of government booths showcasing research programs and demonstrating technologies sponsored by various military and civilian agencies of the United States Government.  It was an animated area on the conventional hall floor.  This year one of those agencies, the Biomedical Advanced Research and Development Authority (BARDA), took the opportunity at BIO to make a major program announcement regarding a new funding initiative called DRIVe (Division of Research, Innovation, and Ventures).  I attended BARDA’s DRIVe event on Wednesday morning hosted by BARDA’s Director, Dr. Rick Bright, and the message was even clearer: BARDA is open for business in a very big way.

BARDA was formed in 2006 to fund the research, development and stockpiling of vaccines and other treatments to meet public health emergencies such as a chemical, biological, radiological, or nuclear attacks.  DRIVe’s mission will be to accelerate research, development, and availability of transformative countermeasures to protect Americans.  Unlike the current funding mechanisms the government uses, it seems that DRIVe will act more like a strategic investor in private and public companies in addition to being a grant maker.  This means that the new division may be able to make direct investments into companies BARDA would like to partner with and derive value by holding equity or equity-like instruments in the venture.  Investing in opportunities in this manner offers a pathway to renew funds to reinvest into other ventures deemed essential to the national interest.

DRIVe’s first public announcements have highlighted the need to control infections in the blood, or sepsis.   The standard-of-care for a patient with a life-threatening infection is to fill the patient with broad spectrum antibiotics in the hope that they will stop whatever is causing the infection, take a blood sample and, after 24 to 48 hours, get the results that indicate whether the disease is caused by bacteria or fungi and what pathogen is responsible.  A targeted therapy can at last be administered after the results of the blood test return.  All too often when an infection is finally diagnosed it has become a potentially fatal problem (usually when the patient has gone septic or has been unresponsive to previous anti-infectives for too long.)

The DRIVe initiative has just launched so it is just starting to get attention, but it should be considered an essential approach to stimulating development of new healthcare products that will prevent, diagnose and treat public health threats in a timely and effective manner.  Its value may not be perceived until the next global healthcare threat emerges, and even then its role in combating threats may be overlooked like many of BARDA’s major accomplishments that we take for granted as a society.

BARDA, Merck And The Fight To Beat Ebola

BARDA’s job isn’t as easy as funding research to make medical countermeasures materialize.  It has to work with companies to come to the table and work on initiatives that aren’t necessarily on the radar screens of big pharma and biotech.  For instance, between 2014 and 2016 Ebola took the lives of 11,000 people in a small region in Africa and was on the verge of becoming a worldwide threat.  The primary means for controlling Ebola then was isolating the sick and restricting travel outside the affected region.  With no widely available effective vaccine, one person on an airline flight could bring the disease to the U.S., Europe or Asia.  For the better part of a decade, BARDA has been working with pharmaceutical companies to enhance our ability to respond to threats like Ebola.

Today, there is another ongoing outbreak of Ebola in a different region of Africa, and this time, because of the efforts of BARDA and its work with Merck & Co., more than 4,000 doses of a novel vaccine are available to control and eliminate the disease threat.  BARDA and Merck have been working in concert to take the fight to Ebola, developing a single-shot vaccine that is being used to protect people who are at high risk of exposure to the virus.  Using a ring-vaccination protocol, Merck’s vaccine has already shown potential efficacy during testing in Guinea, West Africa.  The approach aims to stop the spread of a virus by vaccinating every person who came into contact with a patient and everyone who came into contact with the patient’s contacts.  BARDA is supporting late-stage activities in support of licensure and potential procurement of Merck’s Ebola vaccine into the Strategic National Stockpile, which could be up to $39 million in investment.

By working together and investing in Merck’s efforts, BARDA has not only helped to develop a countermeasure to a deadly virus.  BARDA has kept focus on our capability to respond to emerging biothreats, and ensured that our nation’s prowess to develop and manufacture new vaccines against diseases as they emerge stays intact.  Merck has shown its willingness to step up to the plate as a good corporate citizen and assist world governments tackle some of our toughest health challenges.

BARDA, Achaogen, And The Quest For New Antibiotics

The greatest looming threat to the public health of the U.S. is the emergence of bacterial diseases that are resistant or immune to many antibiotics now in use.  The CDC estimates that drug-resistant bacterial infections affect two million people and kill 23,000 in the U.S. each year at a financial cost of $20-35 billion. Those numbers continue to rise each year.

BARDA’s CARB-X program (Combating Antibacterial Resistance) establishes public/private partnerships to develop new and effective antibiotics.  Convincing companies to develop antibiotics and diagnostics for use in infectious disease is challenging for a few reasons.  First, there is the economic challenge.  Antibiotics and diagnostics are not as lucrative as drugs used to treat rare diseases and cancer.  Second, the regulatory pathway for antibiotics is incredibly risky.  Programs like CARB-X help to reduce some of the financing challenges, rewarding investors in infectious disease companies by providing non-dilutive cash to help propel the technology.  As much as it encourages development of new antibiotics, CARB-X also helps to bring new approaches to treating infectious disease to the forefront of discovery.

Achaogen, Inc., a small company with market value of a little more than one-half billion dollars, is a CARB-X company.  The company received two antibiotic incentive awards through the program for $23.4 million during a crucial stage in the development process.  The typical cost to bring a new antibiotic to market is well over one billion dollars.  Approval for a new antibiotic requires two successful large, phase 3 trials, unlike rare diseases, which only require smaller trials.  That is because antibiotics are so widely prescribed that even a small percentage of adverse events could cause a wide range of problems, from anaphylactic shock to liver damage or weakened and broken tendons, affecting the lives of thousands of people.

Achaogen’s drug, Plazomicin, has been supported by BARDA funding since 2010.  So far, BARDA has provided $136 million to support the development of Plazomicin, including helping to pay for two phase 3 trials.  Plazomicin belongs to the aminoglycoside class of antibiotics and provides a robust therapeutic option against serious bacterial infections that are multidrug resistant gram-negative bacteria, including carrbapenem-resistant Enterobacteriaceae (CRE).  The drug was tested in blood stream infections (BSI) and complicated urinary tract infections (cUTI).  In May an FDA Advisory panel was asked whether Achaogen’s drug showed “substantial evidence of safety and efficacy” in both BSI and cUTI.  The panel voted unanimously (15-0) that it did for cUTI, but only voted 4-11 that it did for BSI.  Regardless, the outcome is a huge success for BARDA as the company heads into a final decision on June 25th in two indications:  Septicemia/Bacteremia (BSI) and Urinary Tract Tract Infections.  Given the safety and clinical history of the drug to date, and the dire need for new drugs for doctors to turn to, we believe Plazomicin should be approved by the FDA.

I was able to catch up to Achaogen’s CEO, Blake Wise, after BIO, and he was unequivocal regarding the importance of BARDA to his company’s drug development process, saying, “The rise of antibiotic resistance poses a great threat to public health, and BARDA’s commitment to address this challenge has been welcomed by the infectious disease community.”  According to Wise, BARDA provided critical support to Plazomicin, and even other pipeline candidates, without which the pace of new drug development would have even more dangerously lagged the rise of antibiotic resistant infections.  Critical to the success of the partnership, management cited the creative approach BARDA has taken to forming innovative and flexible public/private partnerships to make sound investments in products to help fight antibiotic resistant bacteria.

Now with DRIVe joining BARDA’s funding portfolio alongside BioShield and the CARB-X initiative, they have yet another tool in their war chest to spur discovery in the national interest.

WBB Securities Asset Management maintains a long position in Achaogen.