Shionogi and Antibiotics
A feel good story.
This is a rare feel-good moment in the antibiotic space. Shionogi manufactures and markets cefiderocol, a beta-lactam antibiotic that utilizes a clever siderophore strategy to enter and kill multi-resistant Gram-negative pathogens. Shionogi just entered a deal to acquire Qpex, an antibiotic biotech with special focus on beta-lactamase inhibitors. It’s not a huge deal in terms of dollars. Most people are not familiar with Shionogi. But Jeff Loutit of Qpex told me that Shionogi is committed to the antibiotic space – and that inspired me to dig further. What I found was, without exaggeration, inspiring.
From the recent press release on their deal to acquire Qpex –
https://www.shionogi.com/us/en/news/2023/06/shionogi-further-extends-infectious-disease-innovation-platform-with-planned-acquisition-of-qpex-biopharma-inc.html
Shionogi Inc., a New Jersey-based subsidiary of Shionogi, has entered into a definitive agreement pursuant to which Shionogi Inc. will acquire Qpex Biopharma, Inc. Qpex will become a wholly owned subsidiary of Shionogi Inc. The Qpex acquisition further demonstrates Shionogi’s commitment to novel antimicrobial drug research and development and has the potential to accelerate critically needed innovation in infectious disease.
Isao Teshirogi, Ph.D., CEO of Shionogi. ” Following the close of the acquisition, Qpex will become part of Shionogi, and we will work together to comprehensively address the needs of patients and healthcare professionals and to protect society from current and emerging life-threatening bacterial infections.”
Shionogi Inc. would make an upfront payment of $100 million to Qpex equity-holders upon completion of the acquisition, and Qpex equity-holders may be eligible to receive additional payments based on the achievement of certain regulatory and development milestones, for a total potential additional consideration of $40 million.
I interviewed Nate McCutcheon, the CEO of Shionogi Inc. – the wholly owned US subsidiary of the publicly owned Japanese Shionogi & Co. Ltd. of Osaka, Japan and Gareth Morgan, Head of Global Portfolio Management who also works on policy and government affairs for Shionogi Inc. I also spoke with Mike Dudley, the CEO of Qpex.
Shionogi is not well known outside of Japan. The reason for this is probably that, like many Japanese pharmaceutical companies, Shionogi often partners it’s ex-Japan sales with other firms. So the Shionogi name, outside of Japan, is not well associated with its own products. Shionogi is now working to change this by becoming more of a global company according to Nate McCutcheon. Cefiderocol is an example of how well this is working.
The Japanese parent of Shionogi – including its US affiliate – had a total revenue of roughly $3 billion on FY 2022 ending in March of this year. Cefiderocol has been awarded subscription payments by both the UK and Swedish health authorities. Cefiderocol sold about $70 million in the US last year. The ex-US sales have not been made public, but it reasonable to assume that the Swedish and UK subscriptions contributed significantly to those revenues. The UK subscription will hopefully increase its cap next year which should increase cefiderocol revenues. Of course, we all hope and pray for a major pull incentive from a large market like the EU or the US – but no one is holding their breath.
From a strategic point of view, although Shionogi would not go into detail, it is reasonable to assume that a beta-lactamase inhibitor would be a welcome addition to cefiderocol. Qpex is well posed to provide one. Dr. Robert Bonomo has been saying for years, as he repeated recently to me, that cefiderocol is a beta-lactam in search of a beta-lactamase inhibitor. Specifically, Qpex’s xeruborbactam beta-lactamase inhibitor is a good fit for Shionogi. Qpex, as the press release states, will remain whole but as part of the Shionogi organization. As such, it can contribute expertise and products to the enterprise. The global rights to Qpex’s lipopeptide (BRII-693) will remain will go to Brii in China.
Mike Dudley is very excited to be joining Shionogi. He emphasized their depth of knowledge in the beta-lactam antibiotic space going from moxalactam, the first oxacephem antibiotic to doripenem, a recent carbapenem. He is convinced, as am I, that this company is committed to the antibiotic space. And he is, I would say, gratified and proud, that Qpex was chosen by Shionogi.
In a groundbreaking effort, last year, long before their deal with Qpex, Shionogi signed licensing deals with GARDP and CHAI (Clinton Health Access Initiative) to assure low- and medium-income countries access to their antibiotic, cefiderocol. They hope to assure local manufacture of the drug as well. Shionogi viewed a deal with both organizations as necessary to truly cover all aspects of access among LMICs. This has never before been done for an antibiotic. The idea came from Shionogi. They approached GARDP and CHAI. Congratulations are due to all these participants. Wow!
https://www.wipo.int/policy/en/news/global_health/2022/news_0021.html
At the same time, Shionogi clearly recognizes the threat of emerging resistance in LMICs and elsewhere, and they take their commitment to stewardship seriously. Knowing GARDP, I’m sure this is high on their list of priorities as well. They also recognize the importance of commercial success, but they keep their perspective as a mid-size company where the commercial requirements are not the same as they might be for a much larger company.
For a large pharmaceutical company with more than $10 billion in sales, cefiderocol would be more a drag than an asset. A deal to license technology to LMI countries might be more trouble than the positive publicity would be worth. But Shionogi is a mid-size pharma company. As far as I can tell, it is alone among that group in its commitment to the antibiotic space. In terms of size – it’s a Goldilocks company. It’s not too big yet it is big and diversified enough to take on the challenges of antibiotic commercialization without going bankrupt. And Shionogi’s agreements with GARDP and CHAI are absolute proof of their commitment to the antibiotic space.
For those of you who are interested in antibiotic R&D, I am assured by their CEO that Shionogi is constantly looking for new opportunities in the AMR space.
I don’t know about you – but to me all of this feels really good! It’s about time!