FDA OK brightens biotech’s options

Last month’s approval of its once-daily amoxicillin pulsys pill for treating strep throat in people 12 and older gave MiddleBrook new life, after more than three troubling years that had drained the company of its cash, most of its employees, two key partners and even its name.

Amoxicillin pulsys is the first product from the company’s pulsatile technology, designed to make pills deliver sequential bursts, or pulses, of antibiotics to kill bacteria more efficiently than standard antibiotic therapies. MiddleBrook will market it as Moxatag.

While the company will continue seeking Food and Drug Administration approval for its pill for children, the one-a-day 775-milligram amoxicillin pill for 10 days instead of the standard therapy of three or four 500-mg amoxicillin pills a day is a sweet victory, said Edward M. Rudnic, president and CEO. Amoxicillin is America’s leading antibiotic, with 60 million annual prescriptions, including 15 million prescriptions last year for strep throat alone, according to MiddleBrook information.

Meanwhile, MiddleBrook stands to be sold in the next three to five weeks, according to Gregory R. Wade, health care analyst for Pacific Growth Equities LLC of San Francisco. Rudnic said the company is exploring sale or licensing possibilities.

‘Survival’ was the issue

Not long ago MiddleBrook’s fortunes looked grim.

A bit more than two weeks ago, Rudnic said, ‘‘We got to point where profit was no longer the issue — survival was.”

Robert W. Bannon, vice president for investor relations, said, ‘‘We could have only have survived a few months if this [amoxicillin pulsys] wasn’t approved.”

Rudnic, a veteran pharmaceutical executive with experience at Schering-Plough Corp., ER Squibb & Sons and Shire Pharmaceuticals, had developed the pulsatile technology. He founded MiddleBrook in 2000 as Advancis Pharmaceuticals Corp. and it grew to more than 100 employees by 2004, when the company launched an initial public offering at $10 a share.

After that, the company hit a downturn. First, GlaxoSmithKline, the British pharmaceutical giant, ended a licensing agreement to apply the Advancis technology to Glaxo’s antibiotic Augmentin. In response, Advancis trimmed its workforce by 18 percent. Then Sanofi-Aventis, France’s $32 billion pharma giant, sued Advancis for trademark infringement over its name, eventually leading to a new name, MiddleBrook.

Advancis was then stunned in 2005 by a narrow failure in a final clinical trial of a seven-day amoxicillin pulsys therapy for strep throat. Analysts such as Todd Foley of MPM Capital Management Inc. in Boston said the failure of the adult trial ‘‘cast a lot of doubt on their scientific hypothesis,” but he would remain confident in the approach if a children’s trial succeeded. Then the drug’s trial on children also missed FDA marks. Advancis cut expenses by $4 million by eliminating 33 jobs, including six corporate officers, while its stock sank below $2.

Hoping for an upswing

In August 2006, a new phase 3 trial, designed by Advancis, working with the FDA, successfully treated strep in adults and adolescents for 10 days instead of seven. Company executives uncorked champagne bottles and gave employees a paid holiday. In February 2007, the company submitted an application for its lead drug’s approval to FDA, which promised a decision by last month.

During those 10 months, the mood of the remaining 30 employees was tense at times, Rudnic said, but he felt great admiration for those who had ‘‘stood tall.”

No time to celebrate

On Jan. 22, the FDA notified Rudnic that some kind of approval letter would arrive the next day. He gathered his directors at 5 p.m. but there was no letter.

‘‘We didn’t know if it would be a clean approval or full of conditions for further testing,” he said. At 5:30 p.m. his regulatory officer brought in the letter. After congratulating Rudnic, one director quickly said it was time for action.

The leaders had known that with approval they would need to seek more financing. The board stayed late to discuss strategy.

The next day, the stock ran well after the company announced the drug approval.

‘‘It was very hectic,” Rudnic said. The executives ‘‘turned the bankers on at noon,” he said. They priced the deal at 4 p.m. and closed it at 8:30 p.m. Final documents went out to investors at 11 p.m. By 10 a.m. the next day, $21 million had been wired into MiddleBrook’s account.

The company is now talking with ‘‘everybody,” Rudnic said, including pharmas for possible deals to launch the once-daily Moxatag. He anticipates a possible licensing deal or sale to market the pill by the October cold and cough season.

This report originally appeared in The Business Gazette.