Why We Think Investing in Antibiotics Makes Sense

Opinion

Xconomy San Francisco — 

In 20-plus years treating people with infectious disease, Dr. Gavin McLeod has seen plenty of patients with HIV, transplants or cancer, hospitalized from respiratory distress caused by a secondary infection from a virus or bacteria. Sometimes McLeod or his Stamford (Connecticut) Hospital colleagues could diagnose the problem: perhaps it was cytomegalovirus, a common secondary infection among immune compromised patients, adenovirus or a strain of herpes.

Far too often, he said, he has had to tell a patient’s family that there is nothing that can be done because there are no drugs for the particular infection.

The idea of a broad spectrum antiviral or antibiotic to combat any of the viruses and bacterial infections that hospitalize approximately 250,000 immune compromised patients annually, killing an estimated 15 percent of them, “would be a miracle,” said McLeod, a clinical professor of medicine at Columbia University. That miracle drug, he said, would be in the form of a once-daily pill, as easy for his patients to take as an aspirin. For unconscious, hospitalized patients, it would be an intravenous drug.

While they wait for that miracle drug, clinicians must treat secondary infections in the immune compromised with antivirals or antibiotics that often have problems with toxicity, complicated delivery, or drug resistance.

“There are a lot of viral infections that are very important but for which we don’t have effective drugs, including drug resistant influenza and a lot of viruses that effect immuno-suppressed and transplant patients,” said Dr. Douglas Richman, an infectious disease expert at University of California San Diego. The problem, Richman said, is that the need for these therapies does not represent a market size large enough to convince Big Pharma that it is worth making the investment.

Meanwhile, the evolution of both viruses and bacteria that cause them to become drug resistant, coupled with an increasingly tough regulatory climate, drives away investors.

Canaan Partners is one of the few venture capital firms that has invested strategically across this market. We see antiviral and antibacterial related companies as good investments on multiple fronts. There are significant unmet medical needs—if you do the work and prove you have a better drug in a category in which pharma may not be investing, there will be a path to commercialization.

Next, the regulatory environment favors the development of important new drugs that affect life-threatening illnesses.

Further, Canaan’s target patient—a hospital patient in need of life saving therapies—enhances the likelihood that additional investors (including pharma) will see an opportunity to recoup their investment, and therefore find the product worthy of funding through late stage development.

An example of our investment thesis is Chimerix, a Durham, N.C. company developing CMX001, a broad spectrum antiviral to treat cytomegalovirus, BK virus and other double stranded DNA viruses in transplant recipients. Canaan has market estimates for this drug that exceed $700 million worldwide, and the compound has the potential to become a standard of care for double stranded DNA viruses in immuno-compromised patients.

In animals, CMX001 is 50 to 100 times more potent against double strand DNA viruses than the FDA approved generic cidofovir and similarly promising results are expected in humans. Equally important, the Chimerix compound is expected to be a once to twice a week oral tablet, while cidofovir must be given intravenously, and CMX001 does not have the dose limiting kidney toxicity associated with cidofovir. CMX001 also does not seem to lower the white blood cell count as seen with a number of other highly active antivirals.

“Currently doctors may be faced with the choice of watching a patient die from a virus or killing the patient’s kidneys with a toxic drug,” said Randall Lanier, Chimerix Director of Virology.

CMX001 is currently in a Phase 2 trial for CMV, the biggest market in this virus category. It is expected to be in Phase 3 trials in 2011. Chimerix is also initiating a trial for adenovirus, a much smaller market, but one that may earn the compound a fast-track regulatory status and push it to approval faster. Ultimately Chimerix would like CMX001 to be the clinician’s choice for the entire bundle of double strand DNA viruses.

Another factor that made Chimerix attractive to Canaan was that CMX001 was eligible for federal grant money as a potential treatment for smallpox, a virus and potential bioterrorism agent for which the government wants to stockpile drugs. Of the $90 million investment dollars Chimerix has raised, over one-third has been non-dilutive government grants.

Viral diseases are not the only significant health care problem in the infectious disease world. Canaan invested in New York-based Durata Therapeutics. The investor syndicate has committed funds to bring the company’s lead product, dalbavancin, an intravenous antibiotic for MRSA and other gram-positive bacteria, through the full development cycle.

“There’s a real crisis at the moment with regard to bacterial infections,” said Dr. George H. Talbot, an infectious disease expert. In the hospital setting there are some bacteria resistant to all approved antibiotics, leaving them and their physicians with the option of treatment with an experimental combination of drugs.

Furthermore, some gram- positive bacteria, including MRSA, are proving to be difficult for the standard treatment, vancomycin, which is toxic and not that effective. “There is a real need for better efficacy and less toxic intravenous medications for MRSA, which is where Durata comes in,” said Talbot, who has consulted with the company.

Canaan’s infectious disease portfolio also includes Seattle-based Theraclone Sciences, which has a platform to develop novel therapeutic antibodies. Canaan’s initial interest in Theraclone was centered on its powerful antibody drug discovery platform. What then quickly came to light was that it was a remarkable platform to discover broadly neutralizing antibodies in infectious disease.

Theraclone’s lead program is a monoclonal antibody being developed for pandemic and serious flu indications, targeting the protein M2, a protein on all flu viruses that is highly conserved. “That means the same genetic sequence is present in over 90 percent of all flu – different strains of seasonal and pandemic – so it could be broadly active as a flu therapeutic,” said Dr. Kristen Hege, the company’s acting chief medical officer.

Theraclone anticipates the federal government would be a major part of the program’s market since it would stockpile an effective product that targets pandemic and seasonal flu, which changes and poses the risk of resistance. The Japanese company Zenyaku Kogyo has seen the value in the flu program, and has licensed the rights to the flu program in Japan.

While monoclonal antibodies have been approved as cancer and inflammation treatments, using them for infectious disease is new. It is technically challenging to find antibodies that are broadly active and potent against flu in the body’s natural immune system, but Theraclone’s platform allowed the company to find what it thinks is the needle in the biological haystack.

“The antibody is the immune system’s bullet against infectious disease,” Hege said. “Once you know what you’re dealing with, you can infuse a targeted antibody as a treatment and immediately trigger an immune response against the infection. Vaccines, on the other hand, can take several weeks to activate the immune system,” she said.

“When you start to do the cost benefit analysis of shortening intensive care unit stays by one to four days, you can justify a pretty expensive medication that is targeting the seriously ill patient,” Hege added.

Wende Hutton

Wende Hutton

Canaan is comfortable being one of the few investors in this infectious disease market. The firm’s strategy is to diversify its portfolio across antiviral, small molecules, antibodies, and platforms that have the potential to create more than just incremental change for a health care system and patients in dire need of new treatments.

While we continue to be interested in promising technology that could save hundreds of thousands of lives each year, that asset must continue to fulfill our investment thesis of filling an unmet clinical need in a more effective and safer pathway.

[Editor’s Note: Wende Hutton, a general partner at Canaan Partners, also contributed to this article.]

Dr. Stephen Bloch is a general partner with Canaan Partners. He is a former practicing radiologist turned entrepreneur, turned venture capitalist. Follow @

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One response to “Why We Think Investing in Antibiotics Makes Sense”

  1. marshall sterman says:

    Stephen- E-mail me or give me a call at 781 389-9703 and I’ll give you an investment idea that speaks to a broader “fix” for getting MRSA out of the way and allowing treatment with generic drugs.