Bill Gates is one of the backers behind a semi-synthetic compound that could bring an inexpensive antimalaria drug to Africa and Asia
This is an extended version of 'Creative Capitalism' vs. Malaria which was published in the January 26, 2009, issue of BusinessWeek.
When Bill Gates popularized the term "creative capitalism" at the World Economic Forum a year ago, he said the world's deepest problems could be solved only if corporations joined nonprofit organizations, governments, and philanthropists in the fight. "Diseases like malaria that kill over a million people a year get far less attention than drugs to help with baldness," the Microsoft (MSFT) billionaire told his audience in Davos, Switzerland.
One of the Bill & Melinda Gates Foundation's pet projects is now emerging as evidence that creative capitalism can work. The Artemisinin Project is an unconventional effort by Big Pharma's Sanofi-Aventis (SNY), biotech upstart Amyris Biotechnologies, a University of California researcher, and the first nonprofit drug developer in the U.S., the Institute for OneWorld Health, to take on malaria. "If this works, there will be a lot of people piling on," says Christopher Whitty, a professor of international health at London School of Hygiene & Tropical Medicine. "If not, people may well shy away from this kind of approach."
The goal is to get cheap drugs into the hands of poor people around the world who do not have access to health care. While pharmaceutical companies and nonprofits have worked together before toward this aim, this project is more ambitious. "This is part of a grand effort to link biotechnology, industry, and academia on product development," says Regina Rabinovich, head of the Gates Foundation's infectious disease group. "Without these kinds of partnerships, the pharmaceutical industry can't afford to make the investments in developing products for poor people."
Optimism Amid Crisis
Gates says this kind of collaboration is vital if the world is to make progress against some of its most intractable social problems. "While each sector can create some inroads on its own, collaboration and partnership between nonprofits, industry, government, and philanthropists is necessary for long-term sustainability and success," he says.
Gates, who remains the chairman of Microsoft, stopped working full time at the software giant so he could spend most of his time on the foundation. At the World Economic Forum's meeting this year, he plans to release the first in a series of annual letters—in the tradition of his friend, Berkshire Hathaway (BRKA) Chairman Warren Buffett. According to the foundation, Gates is expected to lay out in the letter his priorities and explain why he remains optimistic about the potential for social progress in spite of the world economic crisis.
The Artemisinin Project hasn't been slowed by economics. Artemisinin is a chemical found in a plant—sweet wormwood—that grows in temperate parts of Africa and Asia. It's used to help cure malaria, mostly as a component in artemisinin combination therapies, or ACTs, which are the only truly effective treatment today. Two problems exist. One is that volatile weather and market conditions result in unreliable supplies and wild price swings. The other is ACT costs $3 to $20 per patient, well beyond the reach of many victims.
Scarce Funding; Lucky Finding
Jay Keasling, a biology researcher at the University of California at Berkeley, came up with a potential supply solution in 2003: producing artemisinin semi-synthetically, using a process similar to what biotech companies employ to make drugs for everything from anemia to cancer. He and his associates coaxed genes from wormwood to produce a substance that was close to artemisinin. Then they tweaked the material via a chemical process. But Keasling could not find a corporate sponsor to underwrite his work. So late that year, he took it to the Gates Foundation.
The $35 billion foundation had earlier chosen malaria as one of its prime targets. The foundation tapped OneWorld Health to shepherd Keasling's idea to market and gave the San Francisco-based organization a $42.6 million grant to fund the project. OneWorld Health began working with Keasling and Amyris, a startup he had created with his lab associates. In an unusual move, Berkeley agreed to make Keasling's technology available royalty-free.
A first step was for Keasling and his team to prove they could create a chemical that was nearly identical to natural artemisinin. The genes in the wormwood plant hadn't been sequenced, so they found the three genes they needed by researching well-documented plants, including lettuce and sunflowers, that produce similar chemicals. In late 2005, amazingly, the first gene they tried worked. "It was a miracle. We found a needle in a haystack on the first try," says Keasling. In the early days, Amyris was located in a business incubator on a former U.S. Navy base in Alameda, Calif., sharing space with a woman who made bead jewelry. But eventually they moved to a lab space near Berkeley, where their scientists scaled up the synthetic process from the beaker to the 10-liter tank.
One of the tricks in any partnership is keeping everyone on the same course. Often this requires a commander. Enter Nina E. Grove, a OneWorld Health vice-president with malaria expertise and 20 years of product-development experience at biotech giant Genentech (DNA). She set up a steering committee of partner representatives. Together they came up with a strategy for developing the chemical, scaling up production, and getting it to the marketplace.
After sounding out big drug companies, OneWorld Health picked Sanofi-Aventis last March to find a way to mass-produce the chemical. The drugmaker has its own ACT treatment, so it needed an inexpensive and plentiful supply of artemisinin. And it also saw an opportunity to sell the compound to other drug manufacturers. "We want to become a leading pharmaceutical company in the fight against malaria," says Philippe Farabolini, a director in the company's Access to Medicines department. The company now aims to get ACTs containing semi-synthetic artemisinin into poor countries in Africa and Asia by 2012. That relatively quick turnaround would go a long way toward helping treat the 300 million cases of malaria that occur each year. "We hope we're shaving years off the normal time line," says Grove.
But Sanofi-Aventis and the others soon discovered that Keasling's process wouldn't produce artemisinin as cheaply as they had hoped. After much discussion, Grove and her team concluded that matching the average price of the plant-produced drug would be good enough. At the same time, they got help from a powerful player in the public health community: The Global Fund, financed mainly by Western governments, decided it would subsidize ACTs. With government subsidies, the treatment's cost should come closer to the $1-per-patient target.
Neither Amyris nor Sanofi-Aventis will make a profit from this project. But it has provided revenue, technology, and, for Amyris, a launchpad for a different product—the startup has raised $120 million in venture capital. For Sanofi-Aventis, the project should yield good PR and expand sales of its ACT products. Besides, the company isn't motivated by profit in this market, says Farabolini. Money from selling drugs to the wealthy customers in the developed world underwrites products for the have-nots. "We say the rich pay for the poor," he says.
For the Davos 2009 World Economic Forum special report click here.