Malaria & the Multinationals: Public Private Partnerships APPMG All-Party Parliamentary Malaria Group BEAD Business Exchange on AIDS & Infectious Diseases.

Malaria & the Multinationals: Public Private PartnershipsAPPMG All-Party Parliamentary Malaria Group

BEAD Business Exchange on AIDS & Infectious

Diseases Monday 6 February 2006

Peter Potter-Lesage

MMV – Medicines for Malaria Venture

The Lessons learned from existing PPPs - Product Development Partnerships ….. The example of MMV & antimalarial drugs

• The situation in 1999

• Public Private Partnerships for R&D

• The example of MMV

• Market size, market failure, R&D costs

• Economics behind industry withdrawal

• Virtual drug R&D, partners and partnerships

• The Win/Win Solution …. A joint R&D portfolio

• The Value Proposition of PPPs

• The ‘Experiment’ is over

Public-Partnership Model: Fun in 2001

Bad Bugs, No Drugs

As for antimalarial drug R&D in 1999 …

This area is now considering a PPP solution

Neglected diseases 1975 - 1999

Tropical diseases are good examples of neglected diseases. Of the 1,393 total new drugs approved between 1975 and1999, only 1% (13 drugs) were specifically indicated for a tropical disease ….

Only 3 of these were for malaria

Number by Year & Product Type

Public-Private Partnerships for Product Development:Financial, Scientific & Managerial Issues as Challenges to Future Success / Research Report WHO/CIPR – Commission on Intellectual Property Rights, Innovation & Public Health (Elizabeth Ziemba)

Public-Private Partnerships for Product Development

5 new Public Private Partnerships for product development since 2000

• DNDi - Drugs for Neglected Diseases (CH)

• EMVI - European Malaria Vaccine Initiative (EU)

• MMV - Medicines for Malaria Venture (CH)

• MVI - Malaria Vaccine Initiative (USA)

• iOWH - Institute for One World Health (USA)

MMV & DNDi in Switzerland & ‘Europe’

An island in the heart of ‘Europe’

Deliverables ?

“A dramatic sea-change in research into ten so-called ‘neglected diseases’, including malaria, tuberculosis (TB), leprosy and

sleeping sickness, could result in at least eight new drugs being developed by 2010.

After a barren period when very few therapies were introduced for these diseases, which kill millions of people a year and cause the loss of the equivalent of 92m years’ of healthy life,

there are now over 60 drug research and development projects underway. “

“The New Landscape” in August 2005

Neglected DiseasesDrugs in development (2005) … PPPs = 75%

‘The New Landscape of Neglected Disease Drug Development’ - Dr Mary Moran LSE/Wellcome Trust 2005

PPPs = 47

Social and Economic Impact of Malaria

• Afflicts more than 1/3 of the human population

• 500 million cases per year

• Over 1 million deaths of children under 5: Leading cause of death of children under 5 in Africa

• Malaria is curable: 90% deaths are preventable

• Annual lost GDP for Africa: $12 billion

• Costs up to 40% of total public health expenditure

• Up to 50% of in-patient and out-patient care

• Up to 60% of total household expenditure

Antimalarial Drug Resistance Worldwide, 2001

Chloroquine resistanceChloroquine resistanceS/P resistanceS/P resistanceMefloquine resistanceMefloquine resistance

MMV - A Partnership betweenPublic and Private sectors

MMV Launch Nov 3rd, 1999

Founding Bodies

• Netherlands Ministry of Foreign Affairs• Swiss Agency for Development and Cooperation• United Kingdom Department for International

Development• Global Forum for Health Research • World Bank• World Health Organisation (RBM / TDR)• International Federation of Pharmaceutical

Manufacturers

MMV to operate as a not-for-profit ‘business’

• Establishment of independent Foundation

• Small management team with operational freedom headed by Chief Executive Officer answerable to Board of public / private sector experts

• Virtual R&D approach

• Commercialisation through pharmaceutical companies

Market Failure

• Poor endemic populations cannot pay the fully-loaded discovery and development costs

• New combination drugs costs more

• Net present value analysis suggests pharma companies not likely to see positive returns from R&D investments

• 4 of the last 5 anti-malarial drugs developed have indeed not made a profit

• Financial Risk

• Reputational Risk

Economics behind industrywithdrawal from malaria drug R&D:

Many “Push” and “Pull” public policy responses are possible.

“Push” e.g. MMV

“Pull” e.g. Global Fund

$800 million +

A Virtual Pharma Company or Drug R&D Facility:Avoids Capital Investment, Promotes in-kind Support

‘Shareholders’ ‘Customers’

Donors

Bill & Melinda Gates Foundation

Rockefeller Foundation

Switzerland

Netherlands

World Bank

Wellcome Trust

WHO/RBM

BHP Billiton

ExxonMobil Foundation

Endemic Countries

NGOs (MSF, MSH etc.)

Multi-lateral Agencies

Public/Philanthropic Funders

Global Fund

Pharma

Others

Academia

Medicines for Malaria Venture

Conception: Social VENTURE CAPITAL

• staged financing to correspond with milestones that mark a reduction in uncertainty

• syndication of investment and portfolio management to gather more information and diversify risk

• covenants and restrictions in critical areas to limit potential conflicts

VC Investment firms offer much more than money. Their specialized knowledge of target industries, active involvement in the companies they support, and strategic techniques that align their own and their investees' interests help ensure that promising companies allocate resources effectively and have the best chance for success.

MMV Inputs• $$$• Drug Profile• Partner Management• Link to WHO/RBM/Policy• Malaria Expertise• Evaluation / Monitoring

Public

Private

Value added through effective Public-Private Partnership …. A Win/Win proposition

Public+Private = leveraged cost

For the ‘Public Good’

Industry Inputs• Chemistry IPR• Toxicology• Know How• Assets in Kind• Technology• Liability Insurance

MMV Gets•Rights in DEC•IPR in ‘Field’•Drug Supply•Return on non DEC Sales

Industry Gets•Rights in non DEC•IPR outside ‘Field’•PR Benefit•HR Benefit•Validation of Technology

• Private Goods• Staff satisfaction • Corporate Citizenship and Responsibility

Exploratory Discovery Preclinical Clinical DevelopmentLead Lead Transition Phase I Phase II Phase III

Identification Optimization

OZ (synthetic peroxide)

Dihydrofolate reductase

(DHFR)

Haem Polymerization

MMV Portfolio 2000

4(1H)-pyridones

Novel Imidazolidine

-diones

Pf protein farnesyl-

transferase

(Pf-PFT)

Cyclofarnesyl sequiterpenes

PSAC antagonist

Chlorproguanil-dapsone (Lapdap™)

-artesunate (CDA)

AQ-13 new aminoquinoline

OZ + PQPRBx11160 / OZ 277

+ Piperaquine

Isoquine (an improved

aminoquinoline)

New dicationic molecules

Falcipain (cysteine protease)

(DHFR)

Pf enoyl-ACP reductase

(Fab i)

4(1H)-pyridones Back Ups

Entantioselective 8-aminoquinolines

Pyronaridine- artesunate

Pediatric Coartem™

DB289 (an improved pentamidine)

Novel Macrolides

Artekin ™ (dihydroartemisinin-piperaquine)

Projects in the GSK/MMV mini-portfolio

Next Generation

New Projects to be added

Terminated Projects

Merging Projects

Portfolio October 2005

MMV Product Profiles MeetPublic Health Needs

• Efficacy against drug resistant strains

• Cure within three days

• Low propensity to generate rapid resistance

• Safe in small children (< 6 mos.)

• Safe in pregnancy

• Appropriate formulations and packaging

• Low cost of goods

• Intermittent preventative treatment in pregnancy

• Intermittent preventative treatment in early infancy

• P. vivax malaria (including radical cure)

• Severe malaria

• Prophylaxis

MMV’s Ultimate Goal: a single-dose cure

MMV Product Profiles Meetspecific indications

MMV’s principle Project Partners

DiscoveryDiscovery

Exploratory DevelopmentExploratory Development

Full Full DevelopmentDevelopment

RegistrationRegistration

Large Amounts ofCandidate Medicine

Synthesized

Project Teamand Plans

Synthesisof Compounds

EarlySafety

Studies

CandidateFormulations

Developed

ExtensiveSafety

Studies

Screening

Studies in HealthyVolunteers Phase I

Candidate Medicine Tested in3-10,000 Patients (Phase III)

Studies in 100-300Patients (Phase II)

Clinical DataAnalysis

A long road to a new medicine

…and expensive

Significant new commitments

Rising Global Spending ....Malaria R&D still lags behind

G8 Finance Ministers’ Conclusions on Development, London, 10-11 June 2005

6. Tackling diseases that undermine growth and exacerbate poverty in developing countries will require not only strengthened health systems, but also improved treatment, including universal access for AIDS treatment by 2010 and development of vaccines, including for HIV and malaria. We have made progress this year in implementing the Global HIV Vaccine Enterprise agreed at Sea Island,

and are committed both to taking this further; and to scaling up our support for vaccines and medicines research through the successful Public Private Partnerships model. We call for a report on progress by the end of the year. We recognise also that advance purchase commitments (APCs) are potentially a powerful mechanism to incentivise research, development and the production of vaccines for HIV, malaria and other diseases. We asked Minister Siniscalco to consult the relevant institutions, governments and industry, with the aim of developing concrete proposals by the end of this year.

New Funding announced October 2005 = + $136 million for MMV

• UK DFID (£ 10 million) • (£ 10 million)

• $ 100 million

$ 18 million

Previous total received / pledged $ 113 million

New total received / pledged $ 250 million

INCOME 2000 - 2005 by Funding Segment

Corporates & CorporateFoundations

WHO/UN Agencies

Gov't Agencies

Philanthropic Foundations

MMV Received / Pledged by Funding SegmentOctober 2005 $ 250 million

Corporates &CorporateFoundations

WHO/UN Agencies

Gov't Agencies

PhilanthropicFoundations

Public/Philanthropic in inverse proportion to Business Plan forecast

The ‘Experiment’ phase is over ….The Product PPP model is working

R&D Spending & Indirect Cost Trends

2000 2001 2002 2003 20040.00%

200.00%

400.00%

600.00%

800.00%

1000.00%

1200.00%

2000 2001 2002 2003 2004

Indirect costs • Lean Structure

• Accountability (IAS/IFRS)

• Flexibility

• Quick Decision

• Rapid Execution

MMV Research and Development Spending (base year 2000) trend

Annual ratio of indirect costs as percentage of total spending

The Added Value of MMV as a model PPP

• MMV does not contract out R&D at fully-loaded cost

• Partnership is essential to the process

• Partners do contribute ‘in-kind’ resources estimated as at least 1:1 for public funding

• This effectively doubles the value of funds invested in PPPs

• Pharma and other project partners have so far contributed to joint R&D projects with MMV an estimated $ 30 to $35 millionestimated $ 30 to $35 million

The Added Value of MMV as a model PPP

• MMV not for profit, but has a biotech-like commercial business model

• MMV (currently) totally focused on R&D

• Private sector staff experience - ‘speak the same language’ as their industry partners

• Common interest with Academia

• Funding & Credit Rating = Trust

• Mitigate Financial & Reputational risk for industry partners

• Facilitate ‘Access’ & Clinical trialsFacilitate ‘Access’ & Clinical trials

Results of Portfolio Analysis Model

Cumulative probability of reaching the number of specified registered drugs by year (1)

Cum.Prob.(%)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1 2 3 4 5Number of drugs

~47% chance of having at least 3 drugs registered by

~83% chance of having at least 2 drugs registered by

(1) Includes: Euartekin, CDA, Pediatric Artemether/lumefantrine, DB289, OZ, Panda(2) (excludes Isoquine and OZ severe indication)Source: BCG portfolio model. Based on 4,000 iterations.

Significant likelihood exists that more than one late-stage MMV product will gain approval by 2008-09

1 yr 2 yrs 3 yrs 4 yrs 5 yrs 6 yrs1 yr2 yrsPost- launchPre- launch

Pharmacovigilance

Regulatory

Global Policy(WHO)

Ensure proper scale up

Post distribution

Local Policy

DistributionPublic sector roll-out

7 yrs3 yrs

ManufacturingOngoing forecastingFirst forecast

Set country strategy

Secure raw materialsCMC / network strategy

SRA(1)

NRA(2)

Phase III trials

Share trial data

WHO/country information sharingShare trial data

Treatment guidelinesEDL

Private sector roll-out Ongoing dist.

Financing procurement Drug delivery

Procurement

GFATM App. Funds dispersed

Treatment guidelines

EDL(3)

Productdevelopment

pathway

Ongoing dist.

First countryapproval

Public sectoradoption

Share trial data WHO information sharing

Phase IV research

(1) Stringent Regulatory Authority (e.g., EMEA, FDA, other)

(2) National Regulatory Authority endemic country;may require additional small scale local studies

(3) Essential Drug List; (4) Pre-qualificationSource: WHO website, GFATM research, interviews

Ongoing activity

Direct uptake impact

Public market implementation in key countries will take several years

Conclusions

• MMV = a not for profit business model• Operates as a ‘virtual pharma company’• Also seen as a ‘Social Venture Capital’ investor

• Convenes Public & Private players in the field • Value for money fundamental• Reputation = transparency, confidence, trust • 2 or even 3 new drugs by 2010• Essential to engage more Industry Partners

• Essential for PPPs and Donors to recognise private sector (Industry) contribution to maintain their commitment

Funding Opportunities5th CALL FOR LETTERS OF INTEREST

1.Malaria Drug Discovery Research Proposals2.Malaria Drug Natural Products Proposals MMV is a not-for-profit organization committed to the discovery, development and delivery of affordable antimalarial drugs through public-private partnership. It is expanding its R&D portfolio in order to maximize its chances of delivering a consistent stream of novel antimalarial drugs over the next decade. Two project categories are defined for this year’s proposals. 1. Malaria drug discovery projects that are directed toward the identification of a candidate compound(s) for entry into preclinical developmentProjects may be at an exploratory stage but must have an identified target.Projects at an early or late stage of the discovery process are also encouraged to apply.Applications from single institutions (academic or biotech or pharma) or a partnership between an academic centre and a pharmaceutical company are welcome. The key determinant for funding will be the perceived chance of project success.2. Malaria Natural Product projects are also solicited. They are more likely to succeed if applicants have a well-established infrastructure for a natural product programme, and can demonstrate one or more of the following characteristics:Activity of the extracts together with identified compounds, against P. falciparum in vitro and in animal modelsDemonstrated clinical efficacy of originating extract or identified compounds against malariaMethodology for the identification and optimisation of active agent(s). Projects that have already identified active agent(s) are strongly encouraged to apply.Application for funding is initially requested through submission of a 3 page letter of interest, to reach MMV (see below) no later than February 28, 2006. Electronic submissions are preferred.Details of this call for the two project categories, as well as project selection process can be obtained from the MMV web site (www.mmv.org) or by directing inquiries to the MMV offices, to the attention of:Dr. Ian Bathurst, MMV, 20, Rte de Pré-Bois/PO Box 1826, CH-1215 Geneva 15, SwitzerlandE-mail: applications@mmv.orgMMV gratefully acknowledges the funding and support it has received from: Bill & Melinda Gates Foundation, BHP Billiton, ExxonMobil Foundation, Global Forum for Health Research, International Federation of Pharmaceutical Manufacturers & Associations, The Netherlands Ministry for Developmental Cooperation, Rockefeller Foundation, Roll Back Malaria Partnership, Swiss Agency for Development and Cooperation, United Kingdom Department for International Development, United States Agency for International Development, World Bank, World Health Organization, WHO/TDR and Wellcome Trust.

Peter Potter-Lesage, Chief Financial Officer

Thank you

Malaria & the Multinationals: Public Private PartnershipsAPPMG All-Party Parliamentary Malaria Group

BEAD Business Exchange on AIDS & Infectious

Diseases Monday 6 February 2006

Peter Potter-Lesage

MMV – Medicines for Malaria Venture

MMV ….. the original Vision(MMV Business Plan 2000)

47181-00-SlidesBusinessPlan/3

Market failures in anti-malarialdrug development

Vision for MMV as public-private partnership

Worsening malaria situation withhigh price in terms of humansuffering and contribution topoverty and underdevelopment

Growing resistance to existingdrugs

Unattractive economics for furtherdrug development by industry

• High cost of development andregistration

• Limited market potential andcommercial returns

Withdrawal of major pharmaceu-tical companies from investmentsin tropical diseases, especially inresearch

Improve economics of anti-malarialdrug research and development byinfusing public sector funds(1)

Create the Medicines for MalariaVenture (MMV) to fund and manageresearch and developmentprograms to be carried out by thepharmaceutical industry andacademic institutions

Achieve a sustainable andeconomically viable portfolio ofdrug discovery and developmentprojects to register one new anti-malarial drug every five years

(1) Global Forum for Health Research, Rockefeller Foundation, Swiss Agency for Development and Cooperation, United Kingdom Department for InternationalDevelopment, World Bank, World Health Organization (Roll Back Malaria, TDR), the Netherlands Ministry for Development Cooperation

Acronyms

Public-Private Partnerships for Product Development:Financial, Scientific & Managerial Issues as Challenges to Future Success / Research Report WHO/CIPR – Commission on Intellectual Property Rights, Innovation & Public Health (Elizabeth Ziemba)

Novel MoAs Face Greater Uncertainty Than ACTs

Cum.Prob.(%)

Ability to source attractive new candidates critical to long-term productivityAbility to source attractive new candidates critical to long-term productivity

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

~60% chance of having at least 1 drug registered by

~80% chance of having at least one drug registered by 2022

61 2 3 4 5Number of drugs

Cumulative probability of reaching the number of specified registered drugs by year (1)

However, generating combination drugs from MMV’s

early-stage portfolio will be more challenging

MMV Portfolio May 2001

Dihydroorotate dehydrogenase inhibition (DHOD)

(DHFR)

Falcipain inhibitors

Lactate dehydrogenase project (LDH)

Synthetic peroxide (OZ)

Polymerization

Income & Expenditure

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

Available income

Annual Received/Pledged

Spend & projected(total)

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Available income 8,700,000 21,000,000 23,400,000 31,700,000 40,400,000 58,400,000 34,450,000 40,250,000 38,800,000 23,200,000 11,800,000

Annual Received/Pledged 8,700,000 15,500,000 10,700,000 20,900,000 27,800,000 47,400,000 11,050,000 40,800,000 37,200,000 17,200,000 11,800,000

Spend & projected(total) 3,200,000 8,300,000 12,600,000 19,100,000 28,200,000 35,000,000 35,000,000 39,113,228 31,194,091 32,939,546 31,916,819

R&D 2,300,000 6,700,000 10,400,000 17,000,000 25,200,000 30,500,000 29,500,000 33,113,228 24,694,091 25,939,546 24,416,819

Operations(indirect) 900,000 1,600,000 2,200,000 2,100,000 2,800,000 4,500,000 5,500,000 6,000,000 6,500,000 7,000,000 7,500,000

1 2 3 4 5 6 7 8 9 10 11

Total Expenditure

Available Income

Stakeholders Received /Pledged 2000 – 2005No EU funding & only 2 EU governments

Donor Years $ $ Million % of Total

Governments:

Swiss Government (DEZA/SDC) 2000 / 2007 $ 4.4 2%U.K Government (DFID) 2000 / 2010 $ 28.9 12%USAI D 2004 / 2007 $ 8.0 3%Netherlands Government 1999 / 2005 $ 5.6 2%

Governments: 46.9 19%

U.N. Agencies:World Bank/Global Forum Health 2000 / 2005 $ 4.0 2%WHO/Roll Back Malaria … 2001 only $ 3.5 1%

U.N. Agencies: 7.5 3%Foundations:Bill & Melinda Gates Foundation 2000 / 2010 $ 165.0 66%BHP Billiton 2004 / 2006 $ 0.8 0%Exxon Mobil Foundation 2000 / 2008 $ 2.9 1%Rockefeller Foundation 2000 / 2004 $ 5.3 2%Wellcome Trust 2002 / 2010 $ 20.8 8%I ndividual Donors 2003 only $ 0.0002 0%

Foundations: 194.8 78%

Total 249.2 100% MMV Received & Pledged (Oct 2005):

47181-00-SlidesBusinessPlan/20

In $ mIn $ m

Project variable costs

Fixed overheads

20% security margin

Fixed overheads

20% security margin

20002000 20012001 20022002 20032003 20042004 5 yeartotal

5 yeartotal

10 yeartotal

TotalTotal 7.87.8 18.318.3 19.319.3 25.925.9 24.224.2 95.595.5

In $ mIn $ m

Fixed overheads

20% security margin

Fixed overheads

20% security margin

20052005 20062006 20072007 20082008 20092009 5 yeartotal

5 yeartotal

TotalTotal 29.229.2 26.626.6 30.730.7 29.029.0 33.533.5 149.1149.1 244.5244.5

15 yeartotal

In $ mIn $ m

Fixed overheads

20% security margin

Fixed overheads

20% security margin

20102010 20112011 20122012 20132013 20142014 5 yeartotal

5 yeartotal

TotalTotal 148.9148.9 393.4393.427.727.7 30.730.7 29.329.3 33.533.5 27.727.7

MMV Original Business Plan Figures

2000 2001 2002 2003 2004 TOTAL

3,216,472 8,274,148 12,575,256 19,228,119 28,157,985 71,451,980

Malaria & the Multinationals: Public Private Partnerships APPMG All-Party Parliamentary Malaria Group BEAD Business Exchange on AIDS & Infectious Diseases.

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