Host: Gunnar Esiason
Guest: Kevin Outterson, Executive Director, CARB-X and Professor of Law, Boston University

00:31 Gunnar Esiason
Welcome to the State of Health, the podcast where patients put healthcare decision makers and thought leaders in the hot seat. I’m Gunnar Esiason. Today’s show carries on the antibiotic resistance series. So far, you’ve heard from patient advocates about living with an antibiotic resistant infection, politicians who are trying to fix the antibiotic market disincentives at the heart of the crisis, an investor putting money into companies with the hope that policymakers can make antibiotic development sustainable, and scientists at the bench who are working to develop tomorrow’s antibacterial technologies. Past episodes in the antibiotic resistance series are already in your feed. Today, we learned about the public private partnership that is hoping to launch a new generation of antibiotics. Kevin Outterson, the executive director of Boston based CARB-X joins the show to tell us a little bit about the early-stage antibiotic landscape, the massive amounts of capital that governments and nonprofit organizations are trying to move into biotech companies to keep the antibiotic pipeline alive, and his hopes for the next generation of antibiotics. Let’s talk about the state of antibiotic developers. Kevin, Thanks for coming on the show.

01:49 Kevin Outterson
I’m glad to be here. Thanks for inviting me.

01:51 Gunnar Esiason
What is CARB-X? And what role does it play in the antibiotic ecosystem?

01:57 Kevin Outterson
We actually have a very central role, we take these amazing things that are coming out of university labs from around the world that have been funded by governments, basic science, and we translate them to a product that has completed the first stage of testing in humans, the Phase One testing. And we do that for anything that touches, you know, antibiotics. Both antibiotics and prevention therapy, as well as diagnostics. And we’re entirely nonprofit. We’re based at Boston University. I’m a professor there. We operate globally, we’re funded by governments and foundations and our entire purpose in life is to stop this drought of no outstanding antibacterial innovation in the last several decades, and to really get things that are transformative to patients into the pipeline.

02:48 Gunnar Esiason
How does a law professor end up leading in a global R&D program?

02:57 Kevin Outterson
A lot of what you do in my position is to bring together partnerships, you know, we have five different funders, three governments, US, UK, and Germany, two foundations, the Wellcome Trust and the Gates Foundation. And we worked with 92 different product developer companies all around the world at this point in our first five years. That’s a lot of negotiations and a lot of deals to pull things together, a lot of partnership. And what I did as a practicing attorney, was actually healthcare transactions pulling things together. How I got interested in this is that when I first became a professor, I wrote this — law professors love to write — I wrote this long article, you know, 90 pages on all the things that work and don’t work in drug innovation. But something bothered me because a key assumption in that entire article, 90 pages published in one of Yale’s journals, was that when the drug actually became generic, it would still be just as useful as the day it started. That’s a foundational assumption. But I put a footnote that said, but for antibiotics and things like that, that degrade with use over time, that wouldn’t be true. And went on to finish the article, the articles not about antibiotics, just that one footnote. But it began to bother me, and that basically, everything that works in drug innovation might be upside down and not work for antibiotics. I just became increasingly obsessed. 20 years later, here I am. You have to be careful where your curiosity takes you sometimes, you might be surprised where you end up.

04:45 Gunnar Esiason
I need to address the elephant in the room. I did my undergrad at Boston College and the fact that we can get someone from BC and BU on the same podcast together, I think proves that we could achieve anything in the world.

05:01 Kevin Outterson
It’s like the Yankees and Red Sox. That’s the level of patriots that we’re talking about here.

05:07 Gunnar Esiason
Yeah and exactly for listeners who may not be familiar with the Boston University and Boston College rivalry definitely is a deep rooted rivalry. But nonetheless, it’s exciting to have you on the program. So question about CARB-X again.

Does CARB-X purchase equity, like a traditional biotech venture capital firm?

05:33 Kevin Outterson
No, we don’t. We use the language of investment. And we’re run by you know, all the people who work with us have a lot of industry experience. We make decisions like a venture fund or a business development arm of large pharma would, but we’re entirely nonprofit. We don’t take any equity stake in the companies. What we’re trying to do is to address a global market failure. The fact that these companies can’t make money in antibiotics for, you know, kind of baked into how they’re made today. And so we’re trying to advance that pipeline, improve its quality, improve the innovation potential and, and then hopefully hand it off to people that can take it across the finish line, because we end at the end of the phase one trial. So we’re charitable, we make grants, but we think like a venture capitalist.

06:22 Gunnar Esiason
I would imagine that a venture investor sees CARB-X grant into it into a company or technology, that would be inviting, right, that sort of essentially, is de-risking the earliest stages of adult development to some degree?

06:40 Kevin Outterson
We’ve received 1100 applications around the world and run an elaborate scientific and business due diligence process over time, in a funded 92 companies out the back door. So you know, there’s a lot of investors who are interested in this space who say that our CARB-X due diligence engine helps them to focus on as much smaller and abroad companies. We save them time, by having sifted the world and boiled the ocean to come down with a few. Also, they like the fact that we bring them not only cash grants, but also a lot of technical and scientific and business support. A lot of these companies are really small, that I mean 10 or 15 people. And they have outsourced most of their other work. They need the sort of support that you could get out of a large global company, but they can’t afford it. So we provide the money, but we also have a global network of more than 100, now, experts around the world, mostly people that used to work for large drug companies, but are now retired. And we pay for those folks so that they can provide their advice and help to these companies for free.

8:00 Gunnar Esiason
Why do antibiotic makers need CARB-X? How does drug development work? What are those key infrastructure pieces that CARB-X is providing?

08:27 Kevin Outterson
It’s everything you mentioned (regulatory, clinical trial know how) and then in the earlier phases, just the taking a molecule so you know, you’ll read frequently, in a paper, that published in a Nature or Science, somebody discovered a new antibiotic in the in the soils of Maine, you know, or whatever, from the deep sea trench and they they’ve, but what they mean when they say that is that somebody has found something that in a glass dish, and the petri dish kills bacteria, right? Taking that, and translating that into whether it can help mice, you know, who have bacterial infections that can help other animals have bacterial infections, and eventually be proven to help humans with bacterial infections. That process of preclinical development has many ways that things can go off the rails. And a well run project, you might start with 30 such early preclinical projects and end up with one actual drug at the end of the day. So our goal is to help them understand what they don’t know. And to the extent that we have people within our network that we can provide to them, that will give them a menu. Here’s five people that know a lot about the issue that you’re facing. Pick one and we’ll take care of it, we’ll pay for the cost. So we’re here to accelerate, you know, CARB-X stands for … “acceleration” is the X. And we want to help these companies not die from being ground into economic dust because the economics are so bad. We want to see this really great science move forward.

10:14 Gunnar Esiason
Is there anything out there that’s exciting when we consider traditional antibiotic treatment? Are there things out there that CARB-X looks at? Are there things that CARB-X just doesn’t look at? Or is it more of an all-encompassing look at the space?

10:41 Kevin Outterson
Yeah, in a way, this is a question of which of my children do I love the most right? But I’ll answer it, you know, it’s been my entire life. I’m 59 years old, but it’s been since 1962, that we discovered the world discovered a new class against the worst bacteria that actually got approved by the FDA. That’s along the last discovery that was approved by the FDA my entire life. And almost everything 36 out of the 37 therapeutics in our portfolio today would qualify as the first such thing in my entire life, 36 out of 37 therapeutics. And the last one is also very exciting, but it happens to be from a known class. So what we’re doing is extraordinary innovation, you know, any one of those that makes it through will be the biggest news in six decades in antibacterial innovation. But there’s, there’s a wide variety, I mean, there’s things as unusual as phages, you know, viruses that eat and attack bacteria, ones that are engineered to detect specific bacteria, and to kill them to entirely new chemical classes, things that have never been used before, and therefore go after different targets in the bacteria, and therefore, there’s probably not pre existing resistance to that. And then all sorts of other things that people just called non-traditionals because they’re completely different approaches, you know, somebody would attack a biofilm, you know, in a wound or an infection are in the lungs. Biofilms are like defensive structures that bacteria build in order to make it harder, easier for them to live and also harder for antibiotics to penetrate. For anti-virulence compounds that are designed not so much to kill the bacteria, but to make it, you know, less dangerous to the humans. So, anything we touch is likely to be the most innovative thing that we’ve seen in the approved drug categories for the last five or six decades.

13:34 Gunnar Esiason
Now let’s talk about the actual antibiotic market. Sort of maybe the reason CARB-X is in existence or the reason that it needs to help some of these companies. And something that we’ve spent a lot of time talking about on the podcast for the last couple of weeks. But what is standing in the way of antibiotic drug developers and a sustainable market?

13:55 Kevin Outterson
You think about any product that you have in your life, like your cell phone, you know, new technology we can adopt. And usually the new technology is expensive, but there’s no good reason for the government to limit our access to the iPhone 11 or 12. Right. There might be a good budget reason for me not to buy it but it’s our choice. And the new technology sells not only high prices, but high volumes. For antibiotics, we have an excellent reason not to use it today. You know, the newest antibiotic, we would love to actually use it as little as possible for as long as possible, keeping it on the shelf and still use the ones we have today for as long as they last, and drag it out. Now that’s a wonderful answer for public health. It’s the correct answer. Let’s save the new antibiotics for the future. But think about it for the company. They’ve got 10 to 14 years of patent life by the time they get approved by the FDA. They need to make sales in that first decade or else they’re dead. But what actually needs to happen from a societal standpoint is to sell almost none of the antibiotics for the first decade, great for society, instant bankruptcy for the company. So, you know, if the cell phone had to be, you know, we had to absolutely hold on to our old phones until they absolutely died. And they could prove to a doctor that we needed another one, I think we’d have a broken cell phone innovation market, I’d still be using the things that look like bricks from the 80s. So that’s the basic problem. This is a product that we want to save and not spend today. So there are other things like that in the world, you know that, if you’re in a commercial building, you’re you know, or the university, the University is filled with fire extinguisher equipment embedded in the ceilings, right, and then the walls, you pay for that in advance, hoping to never need it. You don’t pay for that once a fire is broken out, you pay for decades ahead to prevent a fire. And so we need to shift the way that we’re thinking about paying for antibiotics, instead of paying for per pill based on volume based on need today, we need to pay for them more like fire extinguishers or fire departments or preparedness. And that’s the shift that the PASTEUR Act makes in my mind,

16:24 Gunnar Esiason
Then you’re talking about preparedness here. And I think the world has certainly learned a hard lesson over the last 18 months for, you know what failing to invest in preparedness could look like and it’s, you know, coming from somebody who’s lived with infectious diseases entire life, it’s I can’t say it’s super shocking. But it’s definitely something that I think is an important message to be sending right now. But you mentioned the PASTEUR act. Another thing that we’ve talked about on the podcast the last couple of weeks, sort of a legislative item going through Congress right now that we’ve had, you know, both Senator Young and Senator Bennett, the co-sponsors of the bill on the podcast.

Can you talk about PASTEUR, and then there’s also another bill out there the DISARM Act? You know, are they complements? You know, what’s different between them? You know, it’s, it seems like there is some hunger or some appetite to sort of fix this problem from a policy level too.

17:28 Kevin Outterson
I’m a big fan of the PASTEUR Act. And it really answers the questions. I’ve been asking in my academic work for the past 20 years, right? How can we pay for antibiotics based on their value to society, even if we don’t want to use them very much for the first five or 10 years? And the genius of PASTEUR is that the answer is let’s do a subscription. This is like Netflix, you know, whether you watch no shows, or binge 24/7, or you lose track of the rest of your life, there is a paid subscription. And so PASTEUR would set high standards, a few drugs will qualify. And in the federal government pays in advance for them, even if we don’t need very many of them. The company goes away satisfied. The research and development gets reimbursed. We have these drugs ready. We don’t have to use them at any time. But they’re ready for the future. And we are prepared. Right. So I think it’s a brilliant idea. I applaud Senators Young and Bennett and the House sponsors as well, Doyle and Ferguson. It’s a great piece of work. And it has real potential. As we look at the pandemic bill that will eventually go through Congress this year. To understand that, yes, we want to fight the battle against COVID. But we don’t want to just focus everything on the last war. We need to remember that the biggest branch of the tree of life, you know that the most numerous thing that has species and on the earth are bacteria, and they’re the longest foe of humanity think the plague think cholera. And today antimicrobial resistance. We need to also be prepared for bacteria and PASTEUR will do that. You also asked about DISARM. There was a clever idea in 1983 during the Reagan administration to save money for Medicare. Everyone thought it was a great idea. It’s been adopted around the world. It’s when the hospital gets paid in Medicare, they get a single payment for everything that happens at the hospital. So you know, the hospital bed, you know, in the nurse and the drugs you need while you’re in the hospital, and the food unfortunately, were included in that bundle payment. And it saved money for Medicare without a doubt, but it had an unintended consequence. It punished any hospital that uses a branded on patent antibiotic because they will lose money on that patient. Right. So what DISARM is designed to do is to fix that problem to eliminate that unintended consequence of Ronald Reagan’s 1983 reform to Medicare and put them more in a level financial playing field. These ideas are complimentary, you DISARM is more of a let’s fix what’s broken about how Medicare pays for drugs. And PASTEUR is more about let’s dramatically change our societal valuation of antibiotics and pay for value, not volume, and do so in a way that helps the company survive. So I’m a fan of PASTEUR. I’m a fan of DISARM, I think they absolutely work together. But the one that has a chance of moving forward now, I’m told I’m not a political expert, is PASTEUR. And so that’s where my focus lies.

22:09 Gunnar Esiason
Now, I want to go back to CARB-X for a second. What does CARB-X represent? You know, it’s not so often you hear about a fund set up with, you know, public capital or money from foundations to invest in private biotechnology companies. Of course, my life is very close to one such nonprofit organization that invests in biotechnology companies. But what but what does CARB-X really represent for the life sciences and for, you know, global innovation?

22:40 Kevin Outterson
Most of the companies that we support are extremely small. And most of them have reported to us that if we had not been able to support this project, either the project would have died, or the company itself would have died. You see many antibiotic companies because of this market issue that I’ve described, which has become acute in the past five years. Switching to other things, that they’re taking people that that are smart microbiologists, and they’ll move over to viruses or Coronavirus to hepatitis C, hepatitis B, or leave infection entirely. And, and go over to a field that has lots of money like immune oncology. So think about infrastructure, where we are losing the human capacity to develop antibacterial drugs, because the teams of scientists who do that, who know how to do that their organizations have been ground down by terrible economics of the past decade. And so CARB-X is there to just find the most amazing projects that advance them so that they finish their first human trials and are ready to go on to the later round of human trial development. And, and also, you know, indirectly we’re keeping alive the planet’s ability to do this, you know, that the last estimate I saw put up by the German government a couple of years ago, there may only be 600 – 800 PhD scientists left in the world who know what they’re doing, and are able to develop an antibiotic. And a lot of them, I have to say, are nearing retirement age, have a lot of gray hair. And, we need younger, newer scientists, the next generation to join this effort. And it’s hard if all the money for research and for grants and for the companies is in everything, but.

24:46 Gunnar Esiason
You know, it’s the things are you’re saying there I think echo a lot of what Henry Skinner said on the podcast a couple of weeks ago, and he shared a similar fear in that the next generation antibiotic developers is, you know, hinging on really a desire or, you know, hope, hopeful desire for people to get involved in the basic, the basic groundwork of science to do this. So I think it’s a nice sort of link to a past show. And I’ll finish I’ll finish today’s episode with the same question that I asked. I asked Henry from the AMR Action Fund, what does CARB-X need to achieve, to mean that it was a success?

25:31 Kevin Outterson
I told you earlier that it’s been six decades since we’ve had the discovery of a drug that actually was a first in class against the worst bacteria approved by the FDA. In a long time, we’re loaded with such things at CARB-X. I want to see one or two or three or four entirely new classes, groundbreaking things, have them come through the CARB-X portfolio, be approved by the FDA and EMA in Europe, and actually being used sparingly in the patients that need them. To make that happen, and make it sustainable, I think requires the PASTEUR Act, because, you know, even if we paid for all the costs to get the product all the way to the to the FDA approval, you still need a company you need somebody to keep that drug ready and alive and keep doing research on it. So that improves. And PASTEUR I think is that essential link in what’s out there. And so, you know, it’s interesting, our work is we start like 15 years before a drug would be approved. That’s how long it takes to go through this process, as you’re well aware, having spent a lot of time looking at research. And but so we might still be, been around for five years, we might still be five or 10 years away from that first moment. But we can certainly see a change, you know, years ago, the pipeline was characterized by the WHO and Pew Charitable Trust as fragile and weak. And now everyone recognizes that what’s coming through the CARB-X pipeline is amazing. We are grateful for all the little companies doing that work, a couple of big companies with mainly little ones. And I’m especially grateful for people like the NIH, NIAID, who’s just funded this basic research for decades, and we’re able to build upon that, and bring it to patients.

27:32 Gunnar Esiason
I think it’s a, you made an insightful comment there that the amount of time that it takes from you know, getting from the test tube to the patient is we always like to say is just so extraordinary. And you know, I’ve lived it on one hand, and then I think the first time I ever actually built a cash flow model to project what that looks like you see them in an Excel spreadsheet, it’s just like a whole different mindset required to look at it. And I think you’re right that people see it for almost like in this very unique position. On one side, we have like the high flying sexy biotech industry that’s developing and cranking out precision medications that have just been, you know, absolutely life changing for people with CF. And then on the other side, you know, we are relying on those antibiotics that have, you know, been around since the 60s and haven’t really been, you know, iterated upon to a point where they’re materially different. And I look at my own life, right, you know, I’ve gone through first, second, third line antibiotics and now I’m all the way down to last on antibiotics is my only my only remaining options so it’s a personal issue for me, it’s a personal issue for a lot of my friends, my entire patient community and I think the things that CARB-X is doing alongside the AMR Action funding, hopefully our policymakers in Washington if they can get on board with this really do have the potential to make a meaningful change. So with that, I just want to say go ahead

29:02 Kevin Outterson
The CF foundation as you know works with several companies that CARB-X supports, you know, we have been actively looking for several years now any new drug getting new chemistry come in the CARB-X, you know, we evaluated for whether it can have a specifically helpful impact in the CF world and the foundation’s been really helpful in that process for many years. And also know the foundation has been helpful as it is a voice of patients who need new antibiotics in Congress and in Washington. And I applaud that effort. It’s absolutely vital that that continue. I’m grateful for what the foundation is doing. And what you’re doing.

29:50 Gunnar Esiason
Well, thanks, Kevin. I do appreciate the comments and I appreciate you coming on the episode. Good luck with the work and I look forward to seeing what CARB-X is able to do. You know, once we’re able to sort out this policy mess and the reimbursement issue from Washington.

30:09 Kevin Outterson
CARB-X.org Go look at the companies that we’re supporting and the amazing sciences going forward.