Merck has a rare Big Pharma win in antibiotic Phase 3, but with a caution

When Merck $MRK bought out Cubist close to 5 years ago for $9.5 billion, the sell-side crowd stoked considerable enthusiasm for Zerbaxa, a late-stage antibiotic that was tapped for peak sales in the lofty blockbuster range of $1.2 billion to $1.5 billion or so.

Today, Merck boasted that their antibiotic (ceftolozane and tazobactam) — already OK’d several years ago for complicated urinary tract infections — scored in a late-stage non-inferiority showdown with meropenem for either ventilated hospital-acquired bacterial pneumonia or ventilator-associated bacterial pneumonia.

That success will trigger a fresh supplementary application at the FDA, but it’s unlikely you’ll hear much more talk about its blockbuster potential. Instead of opening up a big new field for Merck, the Cubist buyout has led to annual disappointments, with sales of Zerbaxa still too small to merit a mention in its latest 2017 set of numbers.
Therein lies a tale that helps explain why most antibiotics are left in the hands of a few small biotechs, with only rare programs like this surfacing at a giant like Merck.

It wasn’t supposed to be like this, though, especially with routine warnings that drug-resistant bacteria threatens a growing number of people around the world. Back in 2014 Merck insisted that Cubist’s big new antibiotic Cubicin would make a lasting difference to the bottom line. Last year, Cubicin saw its revenue dwindle from a little over $1 billion to $382 million as an early wave of generics carved up the franchise.

The news from Merck sparked this exchange on Twitter Tuesday morning:
Brian Skorney

The response from Baird’s Brian Skorney:

Vibativ was approved in HAP/VAP. Does a whole $20M a year.

Physicians prefer to use older, infinitely cheap antibiotics in their first response, leaving new antibiotics on the sideline for only occasional use. When they’re needed, these antibiotics are urgently required. But that’s still not a very good market, which recent incentives have done little to change.

Merck execs were only too keenly aware of the economics of antibiotic development when they bought Cubist. Their first move was to shut down early-stage research in the field, just as AstraZeneca and others did. Whatever the answer is to the shortage of antibiotics, Merck just offered a painful lesson on the economic failure often hidden behind R&D success.

https://endpts.com/merck-heralds-a-rare-big-pharma-success-for-antibiotic-phiii-but-its-also-a-cautionary-tale-about-the-market/