Over last few years, raising funds for AMR product development has been problematic for companies like Madam Therapeutics. Funding prospects have been cumbersome due to the fact that antibiotics are generally less profitable than drugs used to treat chronic diseases; for example, the net present value of drugs used in oncology is three times higher than that of antibiotics. This is explained by the high costs of development as well as relatively low success rates: only 1.5% of antibiotic compounds identified in preclinical research reach the market. Moreover, the market expects limited expected revenues in terms of price and volume of sales, because of (a) low prices, due to the availability of generic alternatives, (b) limited volumes, due to increasing stewardship requirements for some new antibiotics; (c) the risk of resistance developing and resulting in their decreased effectiveness; and (d) the short duration of antibiotic treatment in comparison with treatment for chronic illnesses.
Fortunately, the funding landscape it is becoming considerably more favorable as a result of a combination of so-called push and pull instruments that now start to interact with each other in a synergistic way.
Fourteen US Democratic senators recently introduced a legislation proposition, the Affordable Medications Act, that includes provisions to set aside $2 billion for an Antibiotics Innovation Incentive Fund that would grant up to three awards for new antibiotic drugs over 10 years. In exchange for the market entry awards, drug developers would relinquish patent and market exclusivity rights.
In addition, the UK NHS has recently announced that it will test the world’s first ‘subscription’ style payment model to incentivize pharmaceutical companies to develop new drugs for resistant infections. We believe these initiatives by the US and UK will make a very big difference in the interests of pharma companies and professional investors to get back in this development space.
As board member of the BEAM Alliance, Remko van Leeuwen anticipated that other countries and economic communities as the EU will follow the example set by the US and the UK.