By Robert Dailey —

ActivBiotics announced last week that it is auctioning
off substantially all of its assets following the failed clinical trial of its
cardiovascular drug Rifalazil.

Rifalazil, a bactericidal anti-chlamidial agent, had been
placed on the FDA’s Fast Track just one year ago.  The drug had shown initial promise as a
potential treatment for peripheral arterial disease (PAD).  While other treatments for PAD exist, none
treat the underlying cause of the disease, the Chlamydia pneumoniae
infection.  But in clinical trials, the
drug showed no greater effectiveness in treating PAD than placebo.

The assets for sale include intellectual property related
to the following:

• Rifalazil and related anti-bacterial compounds;
• A superoxide dismutase (SOD) program focused on
  developing drugs for the treatment of inflammatory diseases; and
• A library of novel anti-bacterial agents.

Bids are due by February 1, 2008.

ActivBiotics was founded in 1996 as Merlin Technologies,
based in Lexington, Mass.  Following its
IPO in 2006 and the news of rifalazil’s acceptance into Fast Track, the small
biotech company seemed to be on the verge of making a big splash.

The mid-1990s witnessed the founding of hundreds, if not
thousands, of such biotech start-up companies.  For a number of years, these companies rode the wave of easy-to-get
venture capital.  Now that a decade has
passed, a lot of these start-up companies find themselves with little money and
few promising compounds.  Are we seeing
the beginning of a bursting biotech bubble?

For years, Big Pharma has told us that drug development
is an arduous process marked by extensive failure.  In the 90s, many investors doubted that
warning, and believed that nimble start-ups would serve as the future
incubators of blockbuster drugs.  Perhaps
Big Pharma was right all along.