The United States, like Europe and the Asia Pacific region, has moved past the disaster relief phase into reopening the economy. While we may not fully know whether reopening will cause harm, we do know that impact investors can play a critical role in recovery and planning for long-term resilience. However, it will be no small challenge targeting impact investing dollars to achieve meaningful impact given the scale of ongoing investment from other sources like government and philanthropy. Done well, impact investing can achieve real public health outcomes that affect communities and the most vulnerable populations. Done poorly, it risks wasting scarce strategic capital and failing to fulfill hopes.
Between 2009 and 2019, the world has seen more than six outbreaks of deadly viruses, including swine flu, H7/N9 avian flu, MERS, by far the largest outbreaks of Ebola and Zika, and an enormous rise in Dengue infections, apart from the COVID-19 pandemic. Yet despite the high likelihood that a global pandemic would emerge the market has been slow to respond. From a commercial standpoint, creating treatments for some unknown future pandemic is a risky proposition. There is no pre-existing market demand that is being met, the treatment is likely to be given for a relatively short duration compared to the chronicity of antihypertensive or antidiabetic drugs, and medications need to be priced so that developing countries can also participate to prevent a wider spread of any pandemic. This is exactly the kind of market failure impact investors are accustomed to addressing with patient capital and creative financing.
Science of viral infection
Any meaningful attempt to combat COVID-19 needs to be anchored in the best scientific evidence we have in our understanding of how the virus attacks cells and spreads within the population. Viruses are packages of proteins whose sole purpose is to replicate by infecting a host cell, where the genetic and enzymatic machinery is high-jacked within the cell to create thousands of copies of themselves, which, in turn, infect more cells. When they take over cells, the normal function of those cells is compromised and the cells eventually die. However, there are a limited number of ways in which different viruses penetrate the cell and seize control of the cellular machinery, and such points of convergence allow for potential treatments that can block multiple viruses.
A multi-institute collaboration, including the Gladstone Institutes and the University of California, San Francisco defined how SARS-CoV-2 virus proteins interact with human cellular proteins to commandeer the cell, revealing that several of the human proteins overlapped with those targeted by other pathogens including multiple other coronaviruses (e.g. MERS, SARS), influenza A, West Nile virus, dengue virus, Kaposi’s sarcoma-associated herpes virus, and polio. Such findings support the potential to create pan-viral therapies that would be beneficial when a new virus emerges.
Although single-purpose vaccines have been enormously effective, eradicating polio for example, they are not a panacea. For example, the common flu vaccine is only 30-60% effective in any given year and has to be reconstructed and re-administered annually. The current pandemic will necessitate the development of vaccines and therapies for other zoonotic viruses potentially capable of jumping from animals to humans to cause the next pandemic.
Role for investors
First, impact investors should be wary of single purpose vaccine trials. New research by the Gladstone Institutes suggests that targeting the pathway through which viruses hijack human cells can be effective against multiple viruses. Since there is an enormous repertoire of such viruses, estimated to be in the hundreds of thousands, it is difficult to develop vaccines for each one individually. Wouldn’t it be more valuable to develop pan-viral drugs – those that can work against many viruses or families of viruses? Then there would be pre-existing treatments in the drug arsenal ready for when the next pandemic strikes.
Second, impact investors should also be wary of funding drug treatment trials. With more than 1000 trials underway worldwide, impact risk is too high.
Instead, impact investors should focus on funding a broad suite of pandemic preparedness technologies and solutions that are in development stages and need to be brought to market. Savvy health investors have built relationships with small laboratories all over the country, investing in pre-clinical development of promising medications, providing the resources and mission-focused dollars to move discoveries from biology labs to chemists who then design new molecular compounds for entry into clinical trials.
An example of a pan viral approach can be found in an old tuberculosis vaccine that has shown early evidence of protecting against viral and parasitic infections. Professor Denise Faustman, Director of Immunobiology at Massachusetts General Hospital in Boston, and Chief Scientific Officer at Boston Immune Technologies and Therapeutics, has been researching the Bacillus Calmette-Guerin (BCG) vaccine for years and already found it remarkably effective for Type 1 Diabetes patients. Type 1 Diabetes is associated with a family of viruses called “enteroviruses.”
Other areas for impact investors to focus:
- Better diagnostics and data management for assessing infection incidence, contact tracing and population health data analytics. For example, scientists at the Gladstone Institutes and UC Berkeley are collaborating on a rapid SAR-CoV-2 diagnostic test using the camera on a mobile phone to read the sample and then upload the data to the healthcare provider for any necessary follow-up, and to the Centers for Disease Control and Prevention to monitor outbreaks.
- Telemedicine to more effectively manage caseloads and help front lines personnel avoid unnecessary exposure. Thais, an early stage company, works with hospital systems in New Jersey, one of the hardest hit areas in the United States, to manage COVID-19 and chronic disease patients with at-home testing and monitoring. This first-in-market AI-powered in-home disease management platform reduces COVID-19 exposures for both sets of patients and helps medical personnel provide more effective and safer care.
- Financing public health capacity and health care delivery by expanding frontline emergency and clinicatl infrastructure. n 1986 the Health Resources and Services Administration devoted $15.3 Million to fund The AIDS Service Demonstration Grants for the four primary centers of the HIV/AIDS epidemic: New York, San Francisco, Los Angeles, and Miami. This program helped to assist overwhelmed urban healthcare systems and led to the comprehensive Ryan White CARE Act. A similar public health response is needed for Covid-19.
A private example of creative financing of health care delivery is the UNICEF Bridge Fund, which accelerates distribution of vaccines, medicine and emergency supplies in disaster zones without adequate medical infrastructure. In emerging markets, the fund has been a key delivery mechanism in the fight against Polio and other preventable diseases. Prudential has been a long-term anchor supporter.
Platform technologies, novel diagnostics and eventually drugs and screening tools will enable us to predict pandemics and address them in a flexible, effective way. These are our best hope for addressing Covid-19 and preventing another deadly pandemic. It is only with more collaboration around science-based innovation that impact investing can dramatically change this landscape. It is more critical than ever for investors to get to know the leading research institutes, their laboratories and most promising innovations.
Tony Berkley is vice president of strategy and impact Prudential Financial, Michele Demers is founder and CEO of Boundless Impact and Kevin Mullane is corporate liaison and ventures at Gladstone Institutes.