Paratek CEO: Next Pandemic Could be Bacterial

TheStreet spoke with Dr. Evan Loh about the looming antibiotics crisis and how it's affecting more than just his company.
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When doctor's rush to treat patients with bacterial pneumonia, they often give out old drugs whose odds of quashing the infection are about as good as the "flip of a coin," says Dr. Evan Loh, the CEO of drugmaker Paratek  (PRTK) - Get Report

Hospitals give out these old drugs, instead of using better medicines created by newer biotechs such as Paratek, says Loh. Yet, the newer drugs, he says, are less likely to be overcome by antibiotic resistance and often are more tolerable. 

But avoiding the newer, better drugs has a major side effect: A potential poor prognosis for patients -- and the drug developers.

In fact, Paratek is one of only a couple of new antibiotic developers that have survived in a quickly crumbling antibiotics industry. Its main product is Nuzyra, a tetracycline-class antibiotic that can be used to fight bacterial pneumonia and acute skin infections. And it's hard for patients to get.

While biotechs like Boston-based Paratek now account for the vast majority of innovation in antibiotics, few antibiotic developers are surviving, say experts. The reasons are many: A messed up marketplace for the drugs, old-fashioned pricing expectations, and the belief by doctors that new medicines against bacteria should be held onto instead of used out of fear of future antibiotic resistance. 

At the same time, as many new antibiotic drugmakers are going bankrupt or selling at huge losses, diseases caused by drug-resistant pathogens have killed around 700,000 people globally each year, according to a paper published last week in the journal Nature titled, “Why big pharma has abandoned antibiotics.”

If the world continues on this path, these deaths could balloon to 10 million by 2050, according to a recent report from a United Nations group on antimicrobial resistance.

Paratek is currently working to get on the formularies of about 600 hospitals in the U.S. It's a small fraction of what's needed, but still a path toward sustainability for the firm that is backed by around $285 million in funding from the federal agency BARDA -- the Biomedical Advanced Research and Development Authority -- and which has a Chinese collaboration with a company called Zai Lab now under priority review.

The company's "survivor story," however, is unique in the industry.

TheStreet recently spoke to Loh by phone on the crisis hitting antibiotics makers and how Paratek specifically is trying to stay ahead during the industry’s downfall. In addition to serving as CEO of the biotech, Loh was previously a senior vice president at Pfizer  (PFE) - Get Report. He is also chair of the Antimicrobials Working Group and was a faculty member at Harvard Medical School and the University of Pennsylvania School of Medicine. The following has been edited for clarity and brevity.

TheStreet: Have people just been taking antibiotics for granted? If your kid gets an ear infection today, it’s a completely different story than if he did when antibiotics weren’t around, right?

Loh: It would be different, and, it wasn’t that long ago. Remember that penicillin was introduced to the marketplace in 1942. And tetracycline was introduced in 1945. They were considered miracle drugs at the time. The introduction of clean water and antibiotics were the two interventions that basically changed the life expectancy of humans globally. So, I think there is an expectation that you should get antibiotics for five bucks.

TheStreet: Yet these are real life savers, right?

Loh: Absolutely, that is not a point of debate; they are life-saving therapies. But today, people don’t know what they don’t know, and I’ll give you an example. Take azithromycin, or Z-Pak, which is given when someone comes to us with pneumonia. Now, look at the resistance rate for the most common bacteria – streptococcus -- that causes pneumonia. There are some places in the country, including the Northeast, where the resistance rate to azithromycin is 50%. That means it’s a flip of a coin.

TheStreet: And that’s the same common bacteria that causes strep throat, right?

Loh: Yes. And, you know what? If you don’t treat step throat, you back to the pre-penicillin-era when strep could actually go down in your heart…. Now, for streptococcus pneumonia, do you know what is the most commonly prescribed antibiotic for after someone fails with a Z-Pak?

TheStreet: No, what is it?

Loh: It’s actually another Z-Pak. That’s because doctors don’t have another option. They are using an antibiotic on a bacteria that already has established a resistance. The bacteria are happy to have more azithromycin, because it makes them stronger.

So, basically, the bacteria have had unfettered access to generic antibiotics that are failing more and more rapidly. They are just in a real-life experiment where resistance is going higher and higher. The Infectious Diseases Society of America’s standards of guidance used to be that if the resistance rates were over 10%, they would say to move away from that antibiotic. There was a plethora of new antibiotics with new mechanisms, and you could just switch. Today, just think about the azithromycin resistance of 50%. It’s still considered first-line therapy, but why is that OK for your mother, father, brother, sister, grandmother or grandfather?

TheStreet: Now, this seems to be happening as everyone is focused on what is new, right? In 2001, it was anthrax. In 2014, it was Ebola. Now, it’s Covid-19. Is part of the problem that people are only focusing on “what’s hot” and losing sight of other threats – including secondary bacterial infections that can occur with, say, even Covid-19?

Loh: We’ve been talking about antibiotic resistance for decades, but it’s really the unspoken pandemic. It’s something that everyone expects to get better, but unless you are affected by it directly – a family member or yourself – you won’t care about it. And, guess what? Antibiotics work so well that you’re basically better in two to three days, or you’re gonna die.

With the pandemic flu, for example, from a complications standpoint, most people die of secondary bacterial pneumonia. And (a recent paper) showed that about about 30% to 35% who die of Covid-19 have a secondary bacterial pneumonia. These people are getting secondary bacterial pneumonia and they are getting treated with antibiotics that we know are not effective. These patients are dying so quickly that you don’t have a chance to put a secondary antibiotic on after 24 hours. Why would you want to second guess when you have a product that you know – based on FDA standards – is more effective. My product is more effective than what’s out there today, and the FDA has continued to ratchet up standards for efficacy, safety and tolerability.

If we don’t recognize this antibacterial crisis that’s in front of us, and this current pandemic, and the way the market place is currently structured, these antibiotic companies are going to go away.

TheStreet: What do you see as a broad-based strategy for preventing the crisis and remedying this problem? Is it pricing? Government subsidies and investment to spur development?

Loh: A lot of people talk about research and development dollars, and there have been some programs put in place where people have given grants for early stage compounds. But what people don’t realize today is that the commercial marketplace is woefully broken. The large pharma companies have all essentially exited out. So there’s not a clear strategic partner that I could even contemplate for my company in the near term.

I think that there is a realization that the commercial marketplace has to be somehow moved in a direction that is permissive for companies to be successful in those first couple of years, to have a bridge until they get to profitability. The first step is … with legislation called the Disarm Act, which is intended to create a separate payment scheme for antibiotics in the hospital, so that doctors and formularies don’t have to worry that they would get paid for their antibiotics. It was in the CARES Act, but was ultimately carved out and we think there might be another way to do that. It would really modernize the (hospital) payment system.

Step two, is something similar to what the U.K. or Sweden are trying to do, which is to think about some type subscription agreement, where the federal government could give a grant to buy a certain number of doses to be allocated across the at-risk populations, until a company became successful in their own right in other markets. I think that could be something that could work well.

The other piece of this that is relevant to TheStreet is that investors have largely walked away from this sector. There is no capital you can really access, because there has not been a commercial launch story that has been successful. We are starting to materially differentiate our launch from any prior launch in the past five years of any antibiotic ... and we see that the future is bright based on the attributes of our product and how we’ve structured our company and gone forth with strategic capital allocations. It think those kinds of stories are few and far between, but we need more than just one. We need investors to come back. 

.... We don’t know that the next pandemic might not be bacterial. You can’t forget about the Bubonic plague that wiped out 60 million people across the globe, back when the population of the globe was much smaller. 

Clarification: Under the Chinese licensing collaboration described with Zai Lab, Paratek's product is currently under priority review in China.