AMR could kill 10M in 2050, but there’s little profit in stopping it

Market Access
Novo Nordisk Foundation Lobby

Last month, the Novo Nordisk Foundation welcomed a group of journalists to its Copenhagen headquarters to share some of the work the Foundation is doing, and explain its unique relationship to the pharma company that shares its name.

In short, the Foundation is the owner of Novo Holdings, an investment vehicle that owns controlling stakes in Novo Nordisk and NovoZymes. A portion of those companies’ profits flows into the Foundation, which uses some of it to support research and public health through grants and gives some of it to Novo Holdings, which pursues a diversified investment strategy that includes impact investing, but is meant to be profitable as well.

At the event, Foundation CEO Mads Krogsgaard Thomsen and Holdings CEO Kasim Kutay discussed how much of their work is motivated by finding the areas in healthcare where the free market incentives don’t line up with society’s needs. One of the most interesting, and illustrative, of these areas, is anti-microbial resistance.

“AMR is something that today kills a million and a half people every single year, and that is poised to be 10 million deaths by 2050,” Thomsen said. “And there is a huge underfunding of new research into antibiotics and an unwillingness to fund those once they’re in the market. So, we need push mechanisms and pull mechanisms.”

The anti-microbial resistance problem

“When you try to kill bacteria, they will mutate to develop enzymes, efflux pumps, and other mechanisms to get rid of the antibiotics or neutralise them,” Aleks Engel, a partner in Bioindustrial Investments at Novo Holdings, explained. “We’ve been in this battle since time immemorial with our own antibodies, but of course we’ve only had antibiotics for about 100 years. And it’s changed how we all live, it’s changed the average life expectancy. It’s probably saved more life than almost anything and, combined with washing hands and hygiene, it is a truly revolutionary part of modern life.”

COVID-19 proved that big pharma, working together with governments, can confront large, viral threats. But antimicrobial resistance doesn’t flare up and demand attention like a pandemic.

“This entire evolutionary path is something that’s relatively slower moving than viruses,” Engels said. “Those things blow up in your face and then may disappear altogether. Bacteria and fungus work on a decades-long progression. Unfortunately, it’s also exponential growth, it’s just slower. We have 1.3 million deaths per year that are directly attributable to drug-resistance infections, and about 5 million deaths per year that involve infections resistant to some level of antibiotics. If we don’t get them under control, this number is projected to be at 10 million in not terribly long.”

It's not a case of antibiotics gradually losing effectiveness, giving doctors warning when it’s time to switch to a new one. Antibiotics work until they don’t.

“It’s very much suddenly you walk into the burn unit of your hospital and you have an Enterobacter infection raging around there and killing your patients, and every single drug you have is no longer working,” Engels said.

Misaligned incentives stand in the way

It’s not that we lack the technical know-how to invent new antibiotics. The problem is that everything about the way drugs are bought and paid for makes it a losing proposition for a pharma company.

“The timeline takes decades and, then, after a long time and many hundreds of millions or billions of dollars of investment, you have a new antibiotic and, as such, you’re going to be put on the back of the shelf where no one uses it,” Engels said.

One reason doctors hesitate to use new antibiotics is for stewardship reasons – they want to use new antibiotics as little as possible to reduce the time before bacteria adapt to them. But equally important are economic pressures. Existing antibiotics are so cheap that hospitals budget comparatively little for antibiotics, and there’s a high bar to clear before insurers will approve using an expensive drug when a cheap one will do. Even when a new antibiotic gets used and works, a patient is only on it for a short time – which means it never stood a chance of matching the profitability of a drug for a long-term or chronic condition.

“The problem is an economic problem at its core,” Engels said. “You can’t make enough money and, as a consequence, big pharma and a number of investors have kind of abandoned the area. Therefore, the Foundation came to us in Holdings and said ‘You guys know how to invest. What can you do for us that’s going to revive this marketplace and get others to invest? Because we can’t just put money into this and lose a lot of money if no one’s going to join us.”

Multiple funds and acquisitions

Novo Holdings met the challenge with not just one initiative, but several. They started the REPAIR Impact fund to invest in innovative early-stage antibiotics.

“REPAIR was an example where we saw that there was an issue in terms of antimicrobial resistance,” Kutay said. “Nobody was doing it. We felt we had a capability and a skill set to identify what we thought were the best technologies out there and to put money behind it. In our case, over $150 million, which is a hell of a lot when you're targeting just one therapeutic area and only in the early stages.”

That was followed by the AMR Action Fund, a billion-dollar fund aimed at taking those same early innovations into proof of concept and, eventually, into the clinic. Finally, Novo Holdings purchased ParaTek Pharmaceuticals, a company that already has two products in this space in the market. The plan is to use ParaTek as a commercialisation vehicle for successful products that come out of the other two funds.

“We’ve placed significant efforts into trying to find things that are differentiated and are inviting people to co-invest with us,” Engels said. “Finding people who are willing to take a bet on this market. We have gained three to one external dollars for every dollar we put into this effort.”

Solving problems for good

Investing in new antibiotics, however, just kicks the can down the road. In order to make this sustainable, the misaligned incentives have to be addressed and corrected. So, Novo Holdings, through these other efforts, is also advocating for a whole new way of buying and selling antibiotics.

“These are unique drugs because only this class of drugs lose efficacy over time,” Engels said. “Novo Nordisk was founded on insulin and insulin is just as effective as it was 100 years ago. These drugs are not. And so, there is something unique about it and therefore they need to be paid for. And we believe the right way to pay for them is through a subscription model.”

pharmaphorum has written before about this so-called “Netflix model” and how the UK is poised to become the first country to try it out in practice. But the basic theory is that hospitals should, rather than paying for individual drugs, pay for broad access to whatever antibiotics they need when they need them.

The other part of a long-term solution is continuing to support research into avenues that can help doctors and patients avoid AMR altogether.

“We will be in this race for a very long time, and bacteria may eventually be the winner of some of this,” Engels said. “But we also have some powerful technologies in which you can avoid the whole problem altogether. The most powerful one is vaccines – if you can vaccinate, you can avoid the whole infection in the first place, it doesn’t mutate, and so on. The other is called antiviral X-factors, where you can just absorb the toxins from the bacteria, so you don’t kill them and you don’t exert a genetic pressure on them.”

Both of these are areas where Novo Holdings has placed at least a few bets, Engels said.

Check out a video interview with Engels below.

Editor’s Note: The Novo Nordisk Foundation provided lodging in and transportation to Copenhagen for our correspondent. The Foundation was not given any assurance of editorial coverage of the event, positive or negative, nor were they granted prior review of any editorial materials.