Steve Cordovano, co-founder of BioAegis Therapeutics
Published February 25, 2020
On Tuesday the number of confirmed coronavirus cases worldwide hit 80,370, with more than 2,700 deaths worldwide, raising concerns that the outbreak has reached a new stage and could continue its global spread.
But why is it that the health sector is so woefully unprepared to respond to an infectious disease outbreak?
It is understandable that this is a novel strain of coronavirus that has suddenly appeared, and various physical characteristics of the virus itself make it difficult to develop a timely treatment. It may take a year or more to develop a vaccine, and at that time it may no longer be effective due to mutations of the virus.
The biotechnology industry has rapidly grown over the last few years, garnering $19 billion in venture capital in 2019, with $37 billion in acquisitions, according to PitchBook, giving rise to numerous and well-publicized successes, particularly in the area of cancer therapy, such as CAR-T immunotherapy.
But investment in infectious diseases is a far different story. According to Statista, in 2018 venture investments in infectious-disease companies plummeted to a mere $372 million, down from almost $1 billion the previous year, while oncology venture investments soared to $4.43 billion.
As one of the co-founders of BioAegis Therapeutics, a private clinical-stage biotechnology company involved in inflammation and infectious disease, I have a unique perspective on why health organizations are so ill-prepared to deal with infectious-disease outbreaks.
1. Pharmaceutical industry has abandoned infectious diseases
The investment community is taking its cue from the pharmaceutical industry. Recently, companies like Novartis, Allergan, AstraZeneca, Sanofi and Eli Lilly have all either shut down or jettisoned their infectious-disease divisions. This creates extreme reticence for venture investors as pharma companies traditionally have been part of the exit strategy. With publicly traded antibiotic companies, even with approved products, trading below cash value, it also removes the only other viable VC exit strategy.
2. Investing in infection isn’t sexy like cancer
This dearth of investment capital for infectious disease research has stifled the development of new treatments that could potentially respond to bacterial and viral infections like what we are witnessing today with the coronavirus. The unfortunate result is the destruction of a once functioning business model that has scared off the venture community and been so dramatically impaired — even mentioning the words “infectious disease” promotes a Linda Blair head-spinning, pea-soup-spitting response from the gatekeepers of capital.
3. The business model doesn’t support antibiotics
Yet another reason why companies are steering clear of infectious diseases are the particular issues with antibiotics. All antibiotics will eventually develop antimicrobial resistance, so the medical community is directed to utilize older classes of antibiotics first, saving the newer ones as the choice of last resort — typically for worst-case situations. This does not make for an attractive business model. Developers of new antibiotics have witnessed abysmal sales and have been unable to recoup their R&D dollars because they are going generic by the time they actually achieve widespread use. In the past year, several antibiotic companies have gone out of business and others are trading below cash. This doomsday scenario has soured the outlook for all infectious-disease treatments, both viral and bacterial.
4. Novel approaches are shunned
To illuminate this, consider our company’s particular attempt to negotiate this minefield in our own quest for capital. We are attempting to commercialize recent discoveries about a naturally occurring human protein, plasma gelsolin, that boosts the immune system’s ability to attack pathogens. It is not an antibiotic or an antiviral. It is a host-based approach that harnesses the body’s immune system to address the most serious outcomes of infectious disease. But when the investment community hears we can fight infection, it groups us in that categories of antibiotics and antivirals.
Hopefully, it will not take the deaths of millions of people to refocus the investment community, not only because of the obvious humanitarian considerations but also because solving the problem is one hell of a business opportunity.
— By Steve Cordovano, co-founder of BioAegis Therapeutics