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Fight Against Malaria 2019

Addressing the market failures in anti-malaria product development


Holm Keller

Executive Chairman, kENUP Foundation

A lack of commercial perspectives has meant the marketable pipeline for interventions against malaria is too narrow. A new funding facility will bring innovative biotech to the domain by mediating its initial financial risk.

Holm Keller doesn’t pull his punches. Progress the world has made in responding to malaria has stalled, he says. Unacceptably, around 1,000 children a day are dying from the disease. Some unpalatable realities need to be confronted.

“Quite simply, there is a market failure around the development of interventions against malaria,” says Keller, Executive Chairman of kENUP, a non-profit organisation. Together with public promotional banks, kENUP promotes innovative approaches to product development with the aim to control some of the world’s most lethal infectious diseases.

“There is high risk in product development and little profit associated with diseases primarily affecting the global south, like malaria. So, once a project leaves academia, companies are usually not investing.”

Moreover, many institutions have slowed down or halted their malaria projects in anticipation of the highly-invested RTS,S vaccine – which is still work in progress and now in pilot programmes in two countries. In the therapeutic market, the world also holds many eggs in one basket: with artemisinin-based combination therapies (ACTs), reliance is on a single therapeutic intervention that really works – and which is procured in huge volumes from very few manufacturers. In parallel, the same, mainly cost-driven procurement procedures lead to fewer and fewer suppliers being engaged in diagnostics.

Incentivising commercial investment

Plainly, healthcare companies need to be better incentivised to invest in this space if malaria prevention, diagnosis and treatment is to advance. “We need to enlarge the malaria vaccine and therapeutics pipeline,” says Keller. “Despite the seriousness of this disease, not enough companies are seriously engaged”.

Alongside the European Investment Bank (EIB), kENUP is initiating a €240 million financing facility called the EU Malaria Fund. By providing funds to a portfolio of projects in commercial development, the EU Malaria Fund aims to balance the risk of failure, or, more optimistically, increase the chance of success.

Supporting a risk-balanced portfolio of projects

The fund builds on an initial portfolio of scientifically independent malaria projects not yet pursued by industry, run by leading companies including spin-offs from renowned research organisations, SMEs, and start-ups. Projects include vaccines, field test kits, and therapeutics, including monoclonal antibodies and new drug targets.

The projects will target different parts of the parasite life cycle and leverage progress in the scientific community through a variety of approaches and research platforms.

Providing milestone-based venture loans

Companies will receive funding in installments, only getting more if their project reaches the next stage of development. “Funds are given as venture loans, which only need to be paid back if a project is successful,” says Keller. “This is why it’s only available to companies, and not universities or research institutions. If a potential product fails, the loan will be converted into a grant.”

Fifty per cent of the money from the EU Malaria Fund is expected to be provided by public and charitable sources from Europe. The remaining is being raised from impact investors, who will reasonably expect their money back (although this is not guaranteed), potentially even with a modest return.

“If the pilot of this financing facility is successful, it could be replicated for other areas where there are similar market failures, such as the field of antimicrobial resistance,” says Keller. “And even if the fund doesn’t create a blockbuster intervention, we hope that will be a much more impactful response to malaria than depending on academia alone: by engaging innovative biotechnology companies that otherwise couldn’t bear the risk.”

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