Big Pharma and Start-Ups Are Key to Health Gains
There has been enormous progress in addressing health problems in the developing world in the past 25 years and much more can be accomplished with greater involvement by major pharmaceutical companies and start-ups, Microsoft cofounder Bill Gates tells Barron’s.
Gates’ massive philanthropic foundation is pushing them to do just that. “We can help them maintain a high-risk, breakthrough-oriented profile, because we can do high-risk things if it’s going to result in some tool that has broad impact in the developing world,” he said in an interview.
Gates, the co-chair of the Bill & Melinda Gates Foundation, gave a keynote speech on Jan. 8 at JPMorgan’s health-care conference in San Francisco. In his prepared remarks, he argues that the “research agendas today in biotech and pharma – and the problems we’re trying to solve in global health – are starting to converge in exciting ways.” He cited the link between efforts to harness the immune system to fight cancer and work on infectious diseases like HIV. “We all share the goal of improving the health and well-being of people globally. Imagine what’s possible if we work together,” Gates said.
Gates, who started the foundation with his wife, Melinda, in 2000, is the world’s second wealthiest man (behind only Amazon.com CEO Jeff Bezos) and probably the most influential philanthropist.
The largest private foundation in the world, with an endowment of $40.3 billion at the end of 2016, the Gates Foundation disbursed $4.6 billion in grants in 2016. The foundation’s giving power was greatly enhanced by Berkshire Hathaway CEO Warren Buffett’s decision in 2006 to give away most of his fortune to the Gates Foundation.
A main focus of the foundation is improving health in the developing world, an effort guided by what Bill Gates has called the desire to “do the most good for the greatest number of people.” The foundation likely has done more to cut early-childhood mortality in the developing world than any other private organization through initiatives to combat diseases like HIV, malaria, diarrhea, and tuberculosis and expand vaccination programs.
Gates talked to Barron’s on Jan. 5 about some of the foundation’s initiatives in global health and ways that mortality among children under 5 in the developing world could be reduced in half by 2030 after falling by 50% since 1990.
Barron’s: There’s a perception on Wall Street that that improvements in global health are about doing good, and not about making money.
Bill Gates: Well, hopefully, the whole reason for me to give the speech at JPMorgan is to show people that at least to some degree, that’s not true. That is, the ability of the foundation to invest in early-stage companies with global health impact can build technologies, even if the exact tool — vaccine or drug or diagnostic — is not exactly the same thing that we’ll be using in the developing world. We’re able to fund the platform work and help it get to critical mass.
Barron’s: Can you give some examples?
Gates: Take a company like Anacor Pharmaceueticals, which developed boron-based drug molecules. These looked super interesting to us because they would work for neglected tropical diseases, particularly helminthic worms (parasitic worms). And it turned out the boron-based molecules they were developing had other disease benefits. And Pfizer bought them out (in 2016), so it’s been super successful financially.
Now, we’re taking those boron drugs and making sure they get out into the developing world. In the vaccine space, we’ve funded early-stage companies like CureVac and Moderna, which are using so-called messenger RNA approaches to developing vaccines. And in the diagnostic space, there’s Sera Prognostics, which is developing a low-cost blood test to identify pregnant women in poor countries who are at risk of premature delivery.
We’re spending over $2 billion a year to research and develop new tools for global health and development. People would be surprised how much flexibility we have to work with private organizations. And you can split it into working with Big Pharma and smaller companies–start-ups like Vir Biotechnology.
Barron’s: One of your points is that there’s a convergence between where research is going with biotech and traditional drug companies and the problems that you’re trying to solve in global public health. What areas excite you?
Gates: Well, the one that’s the easiest to describe is immune-system-related work. HIV, of course, is a disease of the immune system, and ever since HIV emerged, in the effort to understand what’s going on and come up with treatments or cures or prophylactics for HIV, it’s massively advanced the understanding of the immune system. That understanding is being used for cancer immunotherapy.
Our hope is that as that work continues, the benefit back in the HIV space can be very substantial. So that’s why we’re involved with companies like Immunocore as well as Big Pharma. A number of them have immuno-oncology activities, and that’s where discovering vectors and adjuvants and insights about the immune system, which could apply not just to HIV, but all of vaccinology, is interesting. [Vaccinology is the science of vaccines, and viral vectors can be used in gene therapy to replace faulty genes with healthy ones. Adjuvants boost the effectiveness of vaccines.]
One promising vector is called CMV, cytomegalovirus, and we’ve worked with venture-capital investors like Arch Venture Partners and Alta Partners to create a new company called Vir Biotechnology, which will do a lot of infectious disease work, including the CMV-based vaccines, which in animal models, have had the best data for both tuberculosis and HIV.
Part of the reason we need to work with the private sector on that is that the manufacturing and regulatory path for a CMV-based vaccine approach will be very challenging. And so, we think that Vir as a private-sector company can bring in that mix of skills and that sense of urgency that may help us get CMV out as a tool faster than if we were just trying to bridge academic centers to move forward.
Barron’s: HIV is taking a terrible toll in the developing world. What are some of the foundation’s initiatives?
Gates: Although the percentage of the HIV burden [The number of affected people] that’s in developed countries is actually very small, at roughly 5%, the spending to help those patients is a significant portion of the total globally. Gilead Sciences, which has made a lot of money from HIV-related drugs, including Tenofovir, is our partner in using Tenofovir as a daily-dose prophylactic in the developing world. It had some good results, but the adherence on a daily prophylactic was very poor.
And so now we have a three-way partnership with Gilead, which has a precursor for Tenofovir that’s very, very potent, and a company called Intarcia that has a drug depot that it developed for diabetes that should come out in the next year or so. [A drug depot is an implantable, sustained-release drug delivery system]. We plan to take the Gilead drug and put it into the Intarcia drug depot, which lasts for six months, and use that. We think we’ll get very high compliance because you only have to replace it every six months. So with any luck, sometime in the next five years, we’ll have that Intarcia depot, and young women who live in townships in South Africa will have a way to prevent their getting HIV.
Barron’s: The Gates foundation has made many investments in early-stage pharma and biotech companies. How well has it worked?
Gates: The results are pretty fantastic. We’re willing to have dead ends, and we have had some dead ends. In the diagnostic space, our hit rate is probably lower than in some of the other spaces. But even there, things are very promising.
Barron’s: Talk about some of your volume-guarantee programs, in which the foundation assures companies of the purchase of a predetermined amount of a drug or product to encourage development and distribution?
Gates: One of the biggest volume guarantee we’ve ever done is for a first-line HIV therapy –a single-pill treatment regimen containing dolutegravir that is more resistant. The treatment is available for generic manufacturers with no royalty, but there was huge up-front cost to switch and get the pricing down. So we are partnering with Mylan Laboratories Limited and Aurobindo Pharma – and a series of other partners including UNAIDS, the Clinton Health Access Initiative, and Unitaid – to make the treatment available to public sector purchasers in low- and middle-income countries at around $75 per person, per year.
Another large-scale advanced market commitment we participated in, about 10 years ago, involved the pneumococcus vaccine. We worked with companies like Pfizer to expand serotypes included in the vaccine to include those serotypes commonly causing pneumococcal disease in the world’s poorest countries. Additionally, through donor commitments, vaccine makers were incentivized to produce increased volumes of a global vaccine and provide it at affordable prices for the world’s poorest countries, which bear the greatest burden of pneumococcal disease and deaths. These countries are then able to plan for immunization programs knowing that vaccines will be available rapidly, in the quantities they need, and at affordable prices.
So we’ve had a huge number of hits. A lot of them are still prospective, like CureVac and Moderna or the Intarcia implant, or Vir, which are just coming into focus.
Barron’s: The foundation has been around since 2000—what are some of your biggest successes?
Gates: Here’s a basic statistic. In 1990, 12 million children under 5 in the developing world died, which is about 10% of that population. And now we’re down to about 5 million children under the age of 5 dying each year – so we’re under 5%. The biggest reason for that drop is the availability of new vaccines – including the pneumococcus [for pneumonia] and rotavirus vaccines [to prevent a form of diarrhea]. I talked earlier about how we partnered with companies like Pfizer to expand access to the pneumococcus vaccine. But the rotavirus wasn’t reaching the kids in developing countries who were at serious risk of dying. That’s being fixed by volume guarantees.
We’re a founder of GAVI [a global vaccine alliance], and one of its biggest single funders. We’re the founder of The Global Fund to fight AIDS, tuberculosis and malaria. And so even though we need to also help fund the R&D and get that going, if people think if they create a product or they see examples where there is a product that’s not being bought and distributed, then you’re going to not be that motivated to get something done. And GAVI and Global Fund show people that if you do come up with an innovation, there’s funding to get them out to developing countries.
When people can see the miracle of the pneumococcus and rotavirus vaccines, pentavalent, bed nets, artemisinin-based malaria drugs, they can be motivated to say, “OK, there really is a mechanism if I have a way of inventing it.” [Pentavalent is a low-cost, combination vaccine that provides protection children from five diseases: Diphtheria, Pertussis, Tetanus, Hepatitis B and a form of the flu].
Barron’s: Your goal is to cut infant mortality in half again by 2030?
Gates: That’s right.
Barron’s: How can that happen?
Gates: Okay. So in that zero-to-five years of age space, you basically have the first 30 days of life and you have 30 days to five years. In 30 days to five years, we have to make more progress on malaria, the remaining causes of diarrhea, and the remaining causes of respiratory disease. Two of the best ways to combat those threats are to improve the primary health care system and to vaccinate more children.
The first 30 days account for 40% of the deaths under age 5. One of our partnerships in developing countries is to do autopsies and advanced pathology for thousands of deaths. There actually was very little understanding of the actual cause of death. Deaths might be classified as asphyxia or sepsis without any understanding of what intervention might have prevented them.
And so we have these laboratories out in Asia and Africa, and a partnership that includes the CDC [Centers for Disease Control] in Atlanta, where we actually are finding cause of death, and it’s amazing. It’s called a minimally invasive autopsy. And there was a lot of concern about whether parents would be willing to have these biological samples taken? And that’s gone super well.
Barron’s: What else can be done?
Gates: We better understand what’s going on in the first 30 days. To reduce death in those first 30 days, you want to catch premature births and that’s where tools like a test developed by Sera Prognostics that helps identify a mother that’s at risk of premature delivery can potentially save lives.
We also have a collaboration with 23andMe [a genetic testing company], where we looked at the genetic makeup of women who had premature delivery and were able to determine that a selenium deficiency is highly associated with premature delivery. So we now have a program to supplement food products with a number of nutrients including selenium to reduce this deficiency.
We really need to make huge progress in the first 30 days because we can certainly cut in half deaths from 30 days to five years if we do a super-good job on the three big killers there–malaria, diarrhea and pneumonia–as well as nutrition.
Barron’s: What role does nutrition play?
Gates: Nutrition is implicated in half the deaths of children under 5 in the developing world. If you have enough nutrition, even though you get sick, you’ll have enough overall body strength that you’ll survive.
And so we’re doing tons of stuff to try to increase access to micronutrients and livestock in the developing world. But reducing child mortality even further is still an ambitious goal. It took us 25 years to cut child deaths in half. And now we’re aiming to cut under-5 deaths in half again by 2030. Every time you try to reduce these deaths, it gets harder. You go from treating 20 kids to save one, to treating 40 kids to save one. Cost-effectiveness has to be extremely high so that even in these very resource-constrained environments with very little training, often no electricity, your intervention has to be very, very cheap and very effective.
There’s some incredible stuff like a little plastic sticker you can stick on a baby that would turn red if the temperature’s not right, and if we could make those for like $1, those would be pretty easy to use.
Barron’s: Thanks, Bill.
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