The Emperor’s New Clothes

One of my favorite tales is the “Emperor’s New Clothes,” the most well-known version is that retold by the Danish folklorist, Hans Christian Anderson.  A vain emperor is convinced by scoundrels posing as tailors that they have created a beautiful set of clothes for him that can only been seen and appreciated by the sophisticated and intelligent.  Of course, his sycophantic courtiers all agree that the naked emperor is dressed wondrously, but the scam is unmasked when a child watching the entourage shouts out what he can plainly see but his ”betters” are afraid to acknowledge.  As a newcomer to global health and while I am building a network of personal connections, I often rely on publicly-available information about people, projects, programs, and policies.  So occasionally I feel like one of the town-folk watching the imperial procession and wondering what I am missing, either through my lack of knowledge or inability to find the observant kid.

Not related to the above, I have been engaged in a couple efforts to find funding for companies developing product for global health markets that in theory could be attractive investments for the high-risk/high-return investor class (or “less than high return”?).  I found a good starting point is a “Summary of Financing Global Health Ventures Workshop” which was held September 25-27, 2005, in Cambridge, MA, (2005 Workshop Summary).  One of the hosts was Commons Capital LP (CCLP), a social venture fund conveniently headquartered in my home town (other such funds are the Acumen Fund and Good Capital Good Capital).  More than two years ago and much to their credit, CCLP started a subsidiary fund specific to global health ventures (CCLP Global Health) and since then has been looking for money for it, on the order of $100 million.  Though I have spoken with one of the fund’s principals, Elizabeth Bailey, and heard her presentations (e.g., Global Health Partnering Forums of March 2008 [PGH 2008] and May 2010 [PGH 2010], Boston University’s Medtech meeting in May 2010 [ITEC Medtech]), it’s hard to tell what progress has been made.

The CCLP effort got a boost in early 2008 from a $3 million, three-year Gates Foundation grant to CCLP and RTI International, a government-supported contractor, to create the Venture Investment Technical Assistance (VITA) program which would “explore new business models and financing mechanisms for global health product development and commercialization” (CCLP PR).  Sounds like a great program and I know several companies that would benefit from both the financing and the business and technical assistance, so how to apply?  No information at the VITA website (VITA) and as for current projects, they are “Under Construction” (VITA Current Projects).  I learned from Elizabeth that the first (and only?) beneficiary has been Claros Diagnostics (Claros), a CCLP portfolio company, but on the company website, other than the original announcement, details are lacking.  Apparently, John Snow International, another well-placed government contractor, received some of the grant and “helped VITA and Claros identify which priority global health needs the Claros technology would be best suited to address” (JSI Projects).  I’m wondering, is the remainder of the grant in escrow somewhere, waiting for a worthy applicant?

Also not related to any of the preceding, one organization (company?) that I have been trying to figure out is the Institute for OneWorld Health.  Self-identified as a “nonprofit pharmaceutical company … which advances global health by developing effective and affordable new medicines for infectious diseases that disproportionately affect people in the developing world” (IOWH Core Strengths), IOWH was founded in 2000 by Dr. Victoria Hale, who was CEO until replacement by Dr. Richard Chin in 2008.  IOWH has been successful in garnering grants to support its work, a total of about $142.2 million to date, primarily from the Gates Foundation and also recently from the UK’s Department for International Development.  Pharmaceutical companies have pipelines, and IOWH’s is led by a drug, paromomycin, to treat visceral leishmaniasis (VL), a protozoan parasitic disease that kills about 500,000 annually (VL Article).  Paromomycin is an off-patent aminoglycoside antibiotic developed in the 1950s that IWOH tested in Phase III trials in India in 2003-4 (IOWH Drug Program) and gained approval for use against VL in India in 2006 (IOWH PR).  Apparently since then commercialization and use has been on hold pending completion of a “Phase IV demonstration program” to determine if the drug can be delivered and be effective in rural conditions (IOWH Next Steps).  So four years after approval, the drug is not in use to treat VL.  Filling out the rest of IOWH’s pipeline is a project to make synthetic artemisinin and three preclinical products (one for diarrheal disease and two for helminthiasis) (IOWH Pipeline).

For an idea of how IOWH applies its funding, I looked for an annual report with financials, but instead IOWH provides links to its IRS Form 990, the required annual filing for 501(c)(3) organizations, for the years 2004-2008.  According to the 2008 Form 990 (IOWH 2008 990), IOWH spent about $30 million:  $7 million on salaries (including $40K for Dr. Chin and $300K for Dr. Hale), $3.7 million to its law firm, $1.3 million on travel, $7.6 million in contract labor and services (which, I am guessing, is for R and D), and paid a “professional fee” of $2.7 million and gave away $5 million in grants.  At the end of 2008, IOWH had $25 million in cash reserves.  Clearly, IOWH has high visibility in global health.  Dr. Hale was named a MacArthur Fellow in 2006 and a women of the year by Glamour magazine in 2007.  IOWH was named a business leader in public health by Scientific American in 2004, awarded the Skoll Foundation’s Social Entrepreneurship award and the Economist Innovation award in 2005, and named to Fast Company Magazine’s 2008 Social Enterprises of the Year Honor Roll (IOWH Media Center).  It even has two product tie-ins, for a video camera and a charm bracelet charm (IOWH Partners).  But to me, the key metric of success is commercialization, in this case, getting a drug manufactured, distributed, and used, and without that no one, except for those lucky enough to be in the clinical studies, is helped.

Sunscreen anyone?


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