Early Avycaz sales could signal bigger payoff for superbug-fighting antibiotics

The antibiotics market has seen its fair share of action recently, with four high-profile launches currently underway. And while the meds that target gram-positive bacteria are off to a somewhat sluggish start, their gram-negative counterparts have hit the ground running--despite, in one case, a relatively high price tag.

As Evercore ISI analyst Umer Raffat wrote in a recent note to investors, early IMS data for Allergan's ($AGN) Avycaz--a gram-negative product--look "very encouraging." In April, the med posted $488,000 in sales, followed by an $819,000 showing in May. And if Avycaz continues on that trajectory, industry-watchers may see current peak sales estimates of $300 million head north.

More importantly, though, the early success of Avycaz "bodes well" for other gram-negative antibiotics that are making their way through the pipeline--"especially the ones that work on bugs for which all current options fail," Raffat wrote.

President Barack Obama

With antibiotics resistance rising in the U.S., the issue is drawing more attention--and interest from drugmakers. In January, President Barack Obama proposed a big increase in spending on the fight against antibiotic resistant bacteria--to $1.2 billion, nearly double the current levels. The NIH would control a large portion of that tally to fund development of new treatments. And the FDA in 2012 put into action the Generating Antibiotic Incentives Now (GAIN) legislation, which extends certain antibiotics' exclusivity periods to encourage development.

Evidence of strong sales potential could entice other drugmakers to take up arms against so-called "superbugs," too--and Avycaz's strong early performance has come despite a $12,000 sticker price. While that's petty change in a world where hep C cures top $84,000 for 12 weeks of treatment, in antibiotics terms, it's a lot. Consider Merck's ($MRK) Zerbaxa, which it recently acquired in its buyout of Massachusetts' Cubist. That med, another gram-negative bacteria fighter, rolled out at just $3,500.

But as Raffat cautioned, it's still early--meaning it's not yet time to start making comparisons between Avycaz and Cubicin, the Cubist blockbuster that Merck now houses in its arsenal. Two months of sales data isn't much, and there's no guarantee Avycaz's early success will stick.

Gram-positive drugmakers know that, too, and two head-to-head rivals are hoping to turn their own fortunes around. Allergan's Dalvance, approved by the FDA last May, and The Medicines Co.'s ($MDCO) Orbactiv, which won its green light in August of last year, are both "off to a relatively slow start (even in the context of slow antibiotic launches," Raffat said.

Special Reports: The New Drug Approvals of 2014 - Dalvance - Orbactiv - Zerbaxa | Pharma's top 10 M&A deals of 2014 - Merck/Cubist