Masters Series: Superbugs – A Growing Threat

Editor's note: There are fortunes to be made by investing in biotech today. And one of the biggest focuses in the sector right now is in fighting "superbugs" – antibiotic-resistant bacteria.
 

In today's edition of our weekend Masters Series – excerpted from the February issue of Stansberry Venture – editor Dave Lashmet details this threat and shares some companies working to fight this dangerous trend...
 

 

Superbugs – A Growing Threat

By Dave Lashmet, editor, Stansberry Venture
 

The first person to get antibiotics was British policeman Albert Alexander.

This was cutting-edge medicine back in 1941. Alexander was suffering from raging infections of staph and strep bacteria... infections that had moved to his eyes.

The doctors lanced the first eye. It oozed pus for days. The rest of his face was a swollen mass, and it was rotting away.
 

Then they strapped him to a chair and came for his other eye. Everything went black. They offered him a pirate's choice: He could let them put fungus in his veins, or he could perish.

He went for the fungus.

A local pharmacist, Dr. Howard Walter Florey, was working with Oxford University researchers on a new medicine based on bread mold. Something called "penicillin." Bread mold killed bacteria that fought the mold for living space. The idea was that this natural compound could also kill bacteria inside people. It seemed to work this way in mice. But it was in short supply.

The researchers needed a human patient, but one in dire condition, since no one knew the consequences of taking such large amounts... someone like Alexander. The policeman was dying of a bacterial infection that had spread to his whole head. So he agreed to be their guinea pig. He was patient zero.

Remarkably, the therapy worked. With one dose of penicillin, the infection retreated. For a month, blind Mr. Alexander could talk and eat. He even joked with his doctors.

Then, the penicillin ran out.

Albert's infection surged back and consumed him. His doctors were so distraught, they vowed to never test penicillin on adults again.

Children became the test subjects after that. They required smaller doses, so supplies were more likely to extend through their full courses of treatment. Until the University of Iowa discovered how to mass produce penicillin in 1943, it was measured by the thimble.

Albert Alexander became the first life extended by and then the first life lost to antibiotics.

Antibiotics became a strategic medicine in World War II. They doubled survival from simple chest wounds.

After the war, the American drug maker Merck made penicillin commercially available. This new miracle drug changed the country. It supported the baby boom and cut the death rate among mothers. It made severe burns survivable. It turned every cut or incision into a nuisance, not a potential death sentence. Open surgery was routinely performed, even on hearts.

In short, nobody faced Albert Alexander's fate again. Not if you could afford antibiotics. Losing your face – even your eyes – to bacterial infections has been utterly forgotten.

But the bugs have always been out there, waiting...

In India today, tens of thousands of newborns and their mothers are dying in hospitals because there is no infection control. Part of this is a lack of surgical gloves, clean bedding, and sterile water. But much of the problem is due to cut-rate antibiotics. Any bug alive in an Indian hospital already resists the simplest drugs we can throw at it.

Technically, they are called antibiotic-resistant bacteria. But there's a simpler term: "superbugs." And they're not just a problem for squalid Indian hospitals. They are a serious and growing threat faced by hospitals everywhere, including the one in your hometown.

Superbugs don't just resist one or two common antibiotics, like penicillin or methicillin. They can also resist third-line antibiotics like vancomycin. And some superbugs resist everything.

The Centers for Disease Control and Prevention (CDC) estimates 23,000 people died in the U.S. in 2012 as a result of antibiotic-resistant bacteria. Europe sees a similar scale. Another 10,000 are estimated in Japan.

Projecting from current trends, the European Commission on Antibiotic Drug Resistance believes we could face 10 million deaths from superbugs by the year 2050. The only hope is new classes of antibiotics that the superbugs have never seen before.

If those numbers don't scare you enough... CDC Director Dr. Tom Frieden recently called for more effective antibiotic research and development, saying:
 

The next pandemic... is hiding in plain sight. Something that could undermine our ability to practice modern medicine. Something that could devastate our economy and sicken or kill millions.

He was talking about the potential for these superbugs to proliferate and strengthen into bacteria that could weaken, harm, or even kill anyone who has open wounds from surgery.

Frieden's advice is twofold: First, we must track how infections are responding to antibiotics, so we can track resistance. Second, invent more antibiotics.

Subscribers to our flagship newsletter, Stansberry's Investment Advisory, know scientists split bacteria into two broad categories – "gram positive" and "gram negative." Without getting into the scientific details, the names refer to the make-up and thickness of the bacteria's cell walls.

For our purposes, just know that certain "broad-spectrum" antibiotics can treat both gram-positive and gram-negative bacteria. Doctors often prescribe these drugs first. If the first-line drugs work, then you get better. If the drugs fail, doctors will then prescribe more focused second- and third-line drugs. These antibiotics target either gram-positive or gram-negative bacteria.

Doctors have fewer gram-negative options than gram-positive. Technically, gram-negative bacteria are unable to absorb gram's silver-nitrate stain because of their double cell wall. This also makes them more drug-resistant.

The CDC has labeled gram-negative bacteria that resist carbapenem antibiotics – our last line of defense – an "Urgent Health Threat." If a bug breaks through this last-ditch antibiotic, there's not much hope. The CDC says that if you get a systemic infection, survival is a 50-50 proposition. So doctors are scouring the shelves to find anything that helps.

After carbapenem, only two risky, almost forgotten drugs remain. Colistin is one, but resistance is growing. Minocycline is the other, but it has very nasty side effects. Four new antibiotics are in development to treat gram-negative bacteria. These new compounds will only compete against each other to face such superbugs.

The four new gram-negative drugs include:

As you can see in the list, each of the new antibiotics is administered intravenously. But only one can also be administered as a pill. We like the pill, by far. Pills are a superior delivery method compared with an intravenous drip. It's far easier to get people to take their medications regularly when you can hand them a pill. People hate needles.

All four drugs will be targeted in clinical trials for treating hospital-based antibiotic-resistant bacterial infections. But only one of these drugs will let you leave the hospital early. This one drug could become a next-generation panacea – the second-line drug your doctor prescribes you if a cut doesn't heal. It could be the go-to drug for 15 years.

Here's why: Since 2012, a newly approved antibiotic drug gets an extra five years of market exclusivity. Effectively this adds five more years of patent life. Since 1995, a patent lasts for 20 years after it is first filed. It's possible to delay the application. But the U.S. Food and Drug Administration (FDA) now requires that a drug patent starts before the first person is tested.

Since human clinical trials require six or seven reviews by each country's drug regulators – plus the company's time to plan the trials, run them, and interpret the data, and run three trials – the process takes years. Fortunately, the FDA "gives back" the patent life for the time it's pondering the data. In practice, newly approved drugs get about 10 years of market exclusivity.

New antibiotics do take time to ramp up sales. They face a lot of existing competition, plus other new competition. And most doctors are conservative. They prefer drugs with long safety histories. But superbugs stir the pot. Antibiotic resistance means doctors are on the lookout for infections that don't heal. And nursing home patients are likely to get strong antibiotics from the start.

With any drug class, generic competition kills business with lower prices. Yet generic antibiotics spawn bacterial resistance quicker. Newer drugs almost always work better.

Of the four promising new gram-negative antibiotics, one is a standout winner. I think this drug is worth four times what Wall Street thinks because it's the only new pill...

Good investing,

Dave Lashmet
 

 

Editor's note: Out of fairness to Dave's Stansberry Venture subscribers, we can't give away the name of this biotech company. But he believes that if its drug gains approval, Big Pharma could swoop in and buy the company in as little as 24 hours after the announcement. People who buy shares today could be rewarded with a quick triple-digit winner. And the news could come any day... which is why Dave is urging subscribers to buy shares today.

You can gain access to all of Dave's research – including the name of this biotech company – with a trial subscription to Stansberry Venture. If you aren't satisfied after six months, we'll give you all of your money back. To view a video presentation Dave filmed detailing this opportunity, click here.