NEW YORK - Dialogue around neglected disease markets has picked up recently, especially in light of last week's announcement of a $1.5 billion advanced market commitment (AMC) for pneumoccocal vaccines. And a session during the first day of the BIO CEO and Investor Conference centered on whether a dedicated global health investment fund would drive further industry participation.
"There is money there," said Julie Klim, vice president of business development for BIO Ventures for Global Health (BVGH), referencing the nearly $35 billion in new philanthropic foundation commitments made over the last seven years. "We have to find ways of accessing it."
For some in the venture capital community, a portion of such funding could be a bounty of sorts for investors who back a neglected disease product's development through proof of concept and then seek their exit. That was the scenario described by Mark Kessel, a managing director at Symphony Capital LLC, a N.Y. venture firm that uses that model with its investments. As long as there is "a mechanism to be bought out" and recoup principal plus a return, then venture backers wouldn't be averse to funding such research and development, he said.
That type of unique model, Klim told BioWorld Today, one that's "outside the box," provides an incentive for success, and such a framework potentially settles who would "pick up the ball downstream," she added. Importantly, that addresses to some degree market uncertainties inherent in neglected disease product development.
While it remains to be seen whether foundations would buy into that type of model, there are many advocates behind developing some sort of push mechanism that would attract the biotech industry. Apart from the Symphony Capital model, Klim said there are groups already looking into developing global health funds. And while BVGH isn't yet doing that with internal money, it's working to "connect the dots" to make the business case for financing that work.
"I think there are a lot of philanthropic investors that like the idea of using market incentives to build something sustainable," she added. "They're not looking for a venture return on their investment, but getting their money back that could be turned into another investment for global health is a success."
In terms of creating markets as a pull mechanism to draw industry involvement, the new AMC program aims to do just that. Essentially an artificial market established by the World Bank and the Global Alliance for Vaccines and Immunizations, with BVGH participation, it has generated considerable excitement for neglected disease drug development. Through the arrangement, Italy, Norway, Canada, Russia and the UK, as well as the Bill & Melinda Gates Foundation, have committed to purchasing for third-world countries $1.5 billion worth of vaccines for pneumococcal disease, which causes pneumonia and meningitis and kills 1.6 million people every year.
The pilot program is designed to provide seven years to 10 years of funding to support the development of future vaccines and will include provisions to assure their long-term, sustainable supply and price for poor countries. Obviously, supporters hope the effort will spur similar AMCs down the road.
Other market dynamics also are of benefit. For example, certain diseases such as hepatitis C affect both developed and undeveloped countries, so resulting new products that command research and development resources for the former market also could be used in the latter.
The discussion played to a full room during the first day of the conference, which drew 3,000 attendees, half of whom are investors. The annual meeting continues through Wednesday.