What’s Bonner’s “FDA Fast Tracks $6.8 Billion Miracle Antibiotic” pitch about?

Checking into Jeff Brown's "July 1st Approval" teaser pitch -- he says that " I believe this tiny company is sitting on the biggest medical breakthrough in over three decades. Possibly since the discovery of penicillin in 1928."

By Travis Johnson, Stock Gumshoe, April 28, 2020

The latest teaser pitch from Jeff Brown has gotten a lot of attention from Gumshoe readers… so let’s dig in and get some answers (and yes, some readers already posted their findings in our discussions area… so we’ll see if they got the right answer).

The ad is all about a microcap biotech stock that owns a “breakthrough antibiotic” — with the tease being that when “Phase 3 Approval is announced” the stock “could jump 12X in a matter of hours.”

Which is always possible, of course, there are a few past examples from history of little biotechs that surged dramatically higher because of a surprisingly good clinical trial result or an unexpected FDA approval or a huge takeover offer (there has to be some surprise, though, at least for short-term gains… if most followers of that stock expect approval, then approval does not lead to 1,000% gains).

So what’s he looking at this time? This is the lead-in to the ad, which is a pitch for Brown’s pricier newsletter (Exponential Tech Investor, $2,000/yr, no refunds):

“The most powerful antibiotic in history is on the verge of approval.

“And not a moment too soon.

“Already this year, we’ve seen the outbreak of COVID-19 – the latest in a string of potentially deadly epidemics.

“And antibacterial infections are killing people at a rate similar to the Middle Ages.

“Yet we’re currently using antibiotics made in the 1980s.

“And these drugs are proving less effective by the day.”

We’ve been seeing teases for the “next great antibiotic” for as long as Stock Gumshoe has been publishing (we just had our 13th birthday in March, in case you’re wondering)… and there have been a few successes in that area, though most of the drugs that have been teased as solutions to the “superbug” problem or as ways to fix the scourge of “antibiotic resistance” haven’t become blockbusters.

Partly that’s because some of them failed in clinical trials, or ended up with very limited indications that weren’t big enough to generate revenue, but mostly it comes down to the fact that the development and use of new antibiotics has not been very well incentivized by the US healthcare system over the past few decades. Our medical writer Michael Jorrin (Doc Gumshoe) noted the problems that pharmaceutical companies face in antibiotic development, and the reason why so many of them have essentially abandoned that business, in a piece for us about antibiotic resistance back in December… here’s part of what he said:

“Pharmaceutical companies are simply not lavishing large amounts of money, nor yet large amounts of time and energy, on the development of new antibiotics or antimicrobials. It is not good business to do so. As by now you are aware, bringing a new drug from the earliest research into the active molecular agent all the way through to regulatory approval and market launch is extremely expensive. A usually cited price tag is $1.5 billion. Billion, not million.

“Yes, a billion and a half or so is an okay amount to bet on a drug that addresses a disease form for which most existing treatments are less than adequate – for example, one of the many cancer variants which so far have not responded to existing treatment. One would think that a new antibiotic, which successfully managed infections that don’t respond to any existing antibiotics, would be a pretty good bet.

“But that’s not how it works. Let’s say that Company Alpha has developed and brought to market an antibiotic that effectively resolves hospital-acquired pneumonias that have not responded to any other drug in the hospital’s armamentarium. That drug, which we will call AlphaBeta, has the capacity to save the lives of a certain number of patients that develop similar nosocomial pneumonias, and would otherwise have died in the hospital. You could call it a “miracle drug.”

“However, even though it is a “miracle drug,” chances are that it will not make a whole lot of money for Company Alpha. The reason for that is that, chances are, AlphaBeta won’t be used much. Most patients that develop nosocomial pneumonia will be treated successfully with existing drugs, of which there are many. The physicians in charge of the patient’s care have several drugs at their disposal, and they will use those first. AlphaBeta has to be kept in reserve for those cases that don’t respond to the existing drugs. The medical establishment wants it that way. It’s best to hold the big guns in reserve until you need them. That way, you always have the ultimate weapon available.”

That’s the primary reason why antibiotics have been “less than blockbuster” investments in recent decades, though overseas generic competition (and pirating, then overuse) of new antibiotics is also an issue.

But, yes, antibiotic resistance is still a major problem, as pathogens mutate and existing antibiotics begin to fail against some of the worst bugs, and the government is still actively trying to encourage the development of new antibiotics, and lots of smaller companies have ushered new drugs through clinical trials in the past five or ten years. So which one is this that Brown is touting?

Some more clues…

“… the FDA just fast-tracked the approval of this breakthrough antibiotic….

“Desperate for this miracle cure to hit the market, the FDA allowed the tiny company that makes it to skip Phase 2 trials completely.

“Now, Phase 3 approval is due early in the third quarter. Perhaps as soon as July 1st.”

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