Less than 18 months after winning FDA approval for Orlynvah, a novel antibiotic for urinary tract infections, Iterum Therapeutics is winding down operations. For most small biotech firms, regulatory approval is a triumph that lifts stock prices and attracts buyers. But in the antibiotic space, it often signals the beginning of the end.
Iterum’s stock price plummeted after approval, and the company struggled to fund commercialization. Last month, it announced plans to cease operations, joining a growing list of antibiotic developers that have collapsed shortly after regulatory success.
This pattern is alarming but predictable. The world urgently needs new antibiotics, yet the market routinely penalizes companies that take on the long, risky, and expensive work of developing them. Antibiotics are among the most vital medicines ever created—they cure infections and enable modern medicine, from chemotherapy to organ transplants. But bacteria are evolving resistance, and the drugs we rely on are losing effectiveness.
To slow resistance, clinicians and hospitals are urged to use new antibiotics sparingly—a practice called antibiotic stewardship. This approach is essential for public health but comes with severe economic consequences. By design, stewardship suppresses sales, making it nearly impossible for developers to recoup costs, generate returns, or attract investment.
In announcing its shutdown, Iterum cited high commercialization costs and lackluster sales of Orlynvah. The market for antibiotics is broken: responsible use keeps revenues low, while fixed costs remain high.
Policymakers are aware of the stakes, but progress has been slow. Antibiotic-resistant infections contribute to nearly 5 million deaths worldwide each year. In the U.S., drug-resistant bacteria cause about 3 million infections annually and kill an estimated 35,000 people. The financial toll is staggering—a handful of resistant bacteria generate over $4.6 billion in annual healthcare costs, according to the CDC.
Investment in antibiotic development continues to shrink. The World Health Organization recently warned that the pipeline faces a dual crisis: it is too thin and lacks the innovative science needed to meet the threat. Replenishing the pipeline requires significant capital, but investors are understandably wary of a field where even successful companies go bankrupt.
Other countries are experimenting with new payment models. The UK has implemented a subscription model that pays companies an annual fee for access to critical antibiotics, regardless of usage. The EU has agreed to a system that rewards developers with vouchers extending data exclusivity, which can be sold to other drugmakers. The U.S., however, has yet to adopt a comparable solution.
Earlier this year, a bipartisan coalition led by Reps. Buddy Carter (R-Ga.) and Scott Peters (D-Calif.) introduced the Pasteur Act, which would award fixed fee contracts to developers of critically important antibiotics. The legislation aims to stimulate private investment while preserving stewardship. It has support from groups like the Infectious Disease Society of America and the Biotechnology Innovation Organization.
Iterum’s collapse reflects a system-level failure: high-quality healthcare relies on new antibiotics, but their development is economically untenable. If lawmakers do not act with market-based solutions like the Pasteur Act, investment will continue to dwindle, and more developers will head toward bankruptcy—even when they succeed in the lab. In those cases, it is patients who ultimately pay the price.
Henry Skinner, Ph.D., is CEO of the AMR Action Fund, a mission-driven investment fund addressing the global crisis of antibiotic resistance.
