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MARCH 15, 2004
By Amy Tsao A Risky Bet on Antibiotics? [Page 2 of 2] "BUILT ON HOPE." Still, Rauscher remains committed to the drug -- and this approach to bringing products to market. Rauscher says when he was hired three years ago, he and the board decided that Genome Therapeutics would "be focused on in-licensing and marketing" antibacterials and other drugs rather than helping big companies identify new drugs through genomics. Jeff Stein, interim CEO and chief scientific officer at privately held biotech Quorex, questions the licensing business model. "What's being in-licensed is being out-licensed by someone for a reason," he says, observing that slight variants of existing antibacterials probably won't have a big commercial impact because of the low likelihood that they'll boast anything more than a limited ability to do a better job of killing bacteria. He also points out that all companies must spend a lot to prove their antibacterials in multiple trials against a variety of bacteria and in different infection sites in the body -- and that this obligation applies regardless of whether a drug has been licensed or discovered in-house. Not surprisingly, Quorex, based in Carlsbad, Calif., is intent on developing its own antibacterials from start to finish. Its most advanced drug aims to interfere with production of DNA gyraseB, a material seen in all bacteria replication. Quorex expects to start clinical trials in the second half of this year. DEAD END? If smaller biotechs continue to jettison early-stage development for the relatively low-risk approach of licensing, the entire industry could suffer, some say, since this approach would see biotechs abandoning their strong suit -- research and science -- in favor of marketing. "A lot of the drug industry has been built on hope in biotech," says Bockman. "If the Street puts pressure on companies to produce revenues sooner, then the whole complex is going to be destabilized." Nor are profits guaranteed. Shrader points out that although the need for new drugs is evident, it's unclear that the upcoming antibacterials will prove to be the boon for which biotechs have been hoping. Smaller biotechs frequently are able to make money with a single product, he notes, but he questions whether that approach will work with second-generation products. Besides, he adds, biotechs seldom produce a "second drug anywhere near the sales of the first." The need for effective antibacterials isn't going to disappear. But whether biotechs can -- or should -- fill the void is uncertain. If these outfits focus on relatively low-risk candidates they have licensed from pharmaceutical companies, the novel approaches that could provide the best hopes of beating bacteria may never get off the ground.
 Tsao covers biotechnology issues for BusinessWeek Online. Follow her Biotech Beat column only on BusinessWeek Online
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