After a dozen deals, Global Health Investment Fund has overcome a rocky start



The Global Health Investment Fund is nearly fully invested after leading a $10 million round of financing for a Menlo Park, Calif., company with a low-cost device to treat postpartum hemorrhage.

The investment in Alydia Health ticks many of the boxes that spurred the Bill & Melinda Gates Foundation and JPMorgan Chase to launch the fund in 2012. The fund was created to bridge a very specific capital gap and bring to market promising late-stage drugs, vaccines and diagnostic tools for diseases that disproportionately burden low-income populations. The fund invests at the point when promising health interventions are close to commercialization and helps teams develop developing-country distribution strategies.

Alydia, formerly InPress Technologies, was originally formed to reduce maternal mortality in the developing world. The company later changed its strategy (and its name) to focus on the U.S. market. The new investment will help Alydia gain clearance from the U.S. Food and Drug Administration – and also help make the medical device accessible and affordable in low-income countries after all.

It is the 12th investment for a $108 million fund that nearly didn’t get off the ground.

Slow start

In its initial roadshow presentations back in 2012, investors reacted strongly against an upside cap of 2% a year on a 10-year note, ImpactAlpha reported at the time. With a portion of their capital is at risk, investors felt they should share in any upside returns. Terms were changed to return to investors 80% of any returns on top of the original 2%. The fund ultimately secured backing from the likes of the International Finance Corp., GlaxoSmithKline, Merck, the Pfizer Foundation, and Storebrand.

A couple years later, at the Gates Foundation’s urging, the fund’s original managers were replaced with a dedicated team that was charged with picking up the slow pace of early dealmaking.

Now, the fund has a portfolio of a dozen novel health approaches including devices, diagnostics, pharmaceuticals and vaccines. The investments include a rapid diagnostic test for HIV, malaria, Ebola and other diseases; a powerless cataract surgery device; a cholera vaccine; and a company making snakebite anti-venom.

Ramping up global health investments to fight diseases of low-income countries

For a new drug to treat hookworm, GHIF last year helped develop a novel $25 million financing plan to gain U.S. Food and Drug Administration approval for tribendimidine, an improved treatment for hookworm infections. The financing, arranged by PATH, a Seattle nonprofit, leveraged a voucher awarded by the FDA that could be sold to a commercial drug developer seeking faster regulatory review.

Such “priority review vouchers” represent “a lucrative source of revenue that can offset part of the development costs and provide a return on investment to funders,” according to the consulting firm Tideline in a report backed by the Gates Foundation. Developers of drugs for eligible tropical diseases get both expedited review and a voucher for expedited review of another drug. Such vouchers have been sold for up to $350 million.

“Big pharmaceutical companies will pay a lot of money to get their blockbuster drug reviewed quickly,” said Curt LaBelle, managing partner of the Global Health Investment Fund.

In a 2015 deal, GHIF committed $10 million to Medicines Development for Global Health, an Australia biotech company seeking to register moxidectin as a drug for river blindness. According to Tideline’s report, it was the first transaction to link a financing return to the award and sale of a priority review voucher. The estimated $40 million proceeds would provide a return on GHIF’s investment, ensure the drug’s affordability in low-income countries and establish a fund to develop the drug for other neglected diseases.

LaBelle says the fund is starting to see both positive impact and financial returns, though GHIF hasn’t reported on its financial performance. The fund estimates that its portfolio companies have saved 100,000 lives annually and improved 13.5 million more.

Global access

With the investment in Alydia Health, the GHIF is nearly fully invested. (The fund has capital set aside for follow-on investments in its portfolio.) Alydia has developed a low-cost device to treat postpartum hemorrhage by encouraging the uterus to contract quickly, naturally compressing the open blood vessels. The pregnancy complication is responsible for 35% of maternal deaths worldwide.

Severe postpartum complications have been on the rise in the U.S. as well. Women with postpartum hemorrhaging are often taken straight to surgery when medication fails. Alydia’s solution is an alternative to medication, which is not always effective or available, as well as to highly-invasive surgery.

“What caught our eye was the fact that they were going after a poorly served indication around the world,” LaBelle says. “Whether in Africa or the U.S., it’s an issue that’s not easily addressable.”

Alydia’s early technology – spun out of the Cal Poly Center for Innovation and Entrepreneurship – was designed for use in low-resource health centers. The company later pivoted (and changed its name) to focus on the U.S. market. A small feasibility study showed promising results. The $10 million Series B funding led by GHIF will help Alydia undertake a study on the device’s safety and effectiveness and apply for FDA clearance. Astia Angels, which invests in women-led, high-growth ventures, also participated in the financing.

The Global Health Investment Fund also will help the refocus Alydia on the emerging market opportunity as it inches closer to commercialization. The GHIF negotiates “Global Access Commitments” as part of all its deals. LaBelle says Alydia has agreed to develop a low-cost version of its device for low and middle-income countries, and has agreed to caps on pricing for those countries. Investees are required to make other global access commitments, like designing for ease of use or investing in user training as well.

“We want companies to be successful, but we make sure they make their solutions affordable,” LaBelle says. “This isn’t just money you can take and go on your merry way. It comes with obligations.”


Disclosure: ImpactAlpha worked with the Gates Foundation to produce a 2016 special report, Making Markets Work for the Poor, that profiled a number of the foundation’s program-related investments.

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