Report By

Bio Ventures For Global Health

&
Boston Consultancy Group

A model to evaluate business & social case

for TB Vaccine
 Evaluation Team

BVGH executives

BCG advisers

Advisers from AERAS

Major commercial players

Intercell

Crucell

GSK
 Objective

To build case for private sector investment in
TB vaccines
− Reveal gaps where donor involvement may improve
market opportunity

Primary research conducted in
− India
− China
− South Africa
− Nigeria
− Russia
− Brazil
− US
 Study Overview

Demand of TB vaccines will vary across
different markets

Public sector markets in low & middle income
countries

Private markets in low & middle income countries

Markets for high risk individuals in high income
countries
 Product profiles

BCG Replacement vaccine

Administered at birth

70% effective for 10 years

Booster vaccine (Boosts existing BCG)

Administered to infants at 14 weeks

One dose at 10 year intervals (70% effective)

Prime boost strategy

Combination of
− BCG replacement at birth
− Booster administered at 10 yrs interval (80% effective)
 Business case

Base case

BCG replacement
− $ 450 Mn

Booster vaccine
− $ 800 Mn

Prime boost (Both replacement & booster)
− 1 Bn

Market sufficiently high to attract industry
investment

Generating positive risk adjusted net present value
& Internal rates of return in excess of 20%
 Social case

In Asia & Sub – Saharan Africa

17 – 62% reduction in TB deaths

20 – 45% reduction in DALYs
− At cost of $6 to $ 26 per DALY depending on product
profile

DALY: Disability Adjusted Life Years

 Challenges

Vaccine development & Supply chain

Can be overcome through targeted donor
interventions

Need for highly predictive biomarkers

There are no surrogate markers for TB to predict
efficacy of TB vaccine
− Phase III trial will take 3-4 yrs
− Require large patient populations
 Challenges

Shortage of clinical test sites

Investments required to establish additional trial
sites which are needed to support current vaccine
pipeline

Public support for supplying developing
countries with TB vaccine

Cost of technology may be high for devoloping
countries to afford it
 Focus

Potential return on industry investment

Product profiles needed to capture market

Regulatory & distribution pathways
 Analysis

5 key components
− Mapping the disease burden & current R&D landscape
− Developing range of market scenarios based on 3 distinct
product profiles

Assumptions about price

Countries willingness to pay

Time to adoption
− Estimating development & supply costs
− Evaluating financial & social ROI for industry
− Identifying key success factors for introducing new TB
vaccine in developing world
 Disease description

Airborne transmission

Globalization & widespread travel makes it a global
threat

Establish a latent infection that is clinically
dormant for years
 Outdated & Inadequate tools

Prevention

BCG recommended in high burden countries
− Not used in US & parts of EU

Where TB is less prevalent & controlled by antibiotics

BCG shows variable efficacy
− Effective in reducing rate of severe pediatric TB (such as
TB meningitis)
− 10 years of protection against pulmonary TB
− Does not protect adults against pulmonary TB

Which is most common form of active TB
 Outdated & Inadequate tools

Treatment

6 to 9 months treatment regimen
− With 3 – 4 antibiotic drugs

Low patient compliance led to emergence of MDR-
TB

Directly Observed Therapy Short Course (DOTS)
− Recommended TB method is effective

But is unlikely to have significant impact on incidence
− Regular observation of lengthy treatment regimen by
health worker is difficult in developing world

Best hope to bring TB under control in face of HIV/TB &
MDR-TB lies in vaccine
Partial pipeline
 Drivers

Product profile & Pricing influence demand

Product profiles

70% efficacy is minimal target threshold for vaccine
efficacy

Safety at least as safe as BCG
− Safe to administer to HIV+ve infants
Base case assumptions
 Development & Production Costs

BCG replacement
− Production cost: $0.5 - $2 per dose
− Non attrition adjusted development cost - $194 Mn

Booster
− Production cost: $5 - $10 per dose
− Non attrition adjusted development cost - $203 Mn

Attrition adjusted R&D cost

To get 1 vaccine to market
− $600 - $800Mn (35% chance that 1 vaccine will be
successful)
 Development & Production Costs

Total investment:
− Several 100 Mn when cost of manufacturing capacity is
included

Looking at current manufacturing capacity that
can be utilized for new vaccine
− Additional investment of $200 Mn may be necessary to
meet global demand
 Timing

First successful product is likely to be licensed
by 2013 – 2015

Longest & costly stage of development is
Phase III

To demonstrate protection in large sample of at risk
individuals
− Phase III trials will take 3 – 4 years
 Pricing & Market penetration

Public Sector markets in low & middle income
countries

$14 - $15 per regimen in middle income countries

$3 per regimen in low income countries

For India & China
− Price sensitive markets
− Less than $ 1 per regimen
 Pricing & Market penetration

Private markets in low & middle income
countries

3 factors drive vaccine uptake
− Unavailability of vaccine in public market
− Perception that product is an improvement over existing
products
− Willingness to pay out of pocket for vaccines
− $26 - $29 per regimen
 Pricing & Market penetration

Markets for high risk individuals in high income
countries

Vaccine would be only adopted for high risk
population such as
− Health care workers
− Prison populations
− Nursing home residents
− HIV patients
− Immigrants
− $50 - $100 per regimen
 Distribution channels

BCG replacement can use same channel as
BCG

Resulting in high uptake

Booster can be given during one or more visits
scheduled for

WHO Expanded Programme on Immunization
− Typically up to 3 doses before age one

School vaccination programme can prove
successful
− Ability to work through schools is evaluated in adolescent
epidemiology studies in IN & SA
 Market Demand

BCG Replacement

Majority demand from developing countries

Booster

Middle income markets will demand bulk doses
 Business Case for Investment

NPV: $35 Mn – $125 Mn

IRR: in excess of 20% from 2013 – 2030

Discount rates

Pharma Co: 10 – 15%

Biotech Co: 20 -25%
− If company receives R&D funding from donor or PDP

Lower discount rate

NPV: Net Present Value

IRR: Internal Rate of Return
PDP: Product development partnership
 Base Case

BCG Replacement

Global annual market : $450 Mn

Doses: almost 60 Mn

At market peak
− High income market will generate half of revenue
− Remainder from doses needed by low & middle income
markets
− Public market in low & middle income countries expected
to generate $90 Mn

At 20 % Discount Rate
− NPV = $35 Mn & IRR = 25%
 Base Case

Booster

Global annual market : $800 Mn

Doses: almost 40 Mn

High income markets driving revenues
− $400 Mn

Remainder doses uptake by
− Private market in low & middle income countries
− Public sector markets in middle income countries

At 20 % Discount Rate
− NPV = $125 Mn & IRR = 32%
 Base Case

Prime boost strategy

Global annual market : $1 bn

Doses: almost 100 Mn

Revenue drivers
− High income markets driving revenues
− Private market in low & middle income countries

At 20 % Discount Rate

NPV = $41 Mn & IRR = 22%
Cash Flow by Year & Market
 Social Case of investment

BCG Replacement

17% reduction in TB deaths

20% reduction in DALYs by 2029

Booster

40% reduction in TB deaths

22% reduction in DALYs by 2029

Prime boost

62% reduction in TB deaths

45% reduction in DALYs by 2029
Social Case of investment
 Social Case of investment

Investment in TB Vaccine

Highly cost effective for public sector donors

World bank considers health interventions that
cost within $100 per DALY

Vaccine falls within this range
 Challenges & Opportunities

Lack of surrogate markers that predict clinical
efficacy of vaccine

Investment in highly predictive biomarkers that
correlate with protection from disease
− Could have dramatic impact in reducing length of CT
 Challenges & Opportunities

Shortage of CT sites

Aeras is setting up CT sites in India and SA
− Still a need for additional sites to support the current
pipeline

1-2 Phase III trials can be started in the next 2-3 years
− European and Developing Countries Clinical Trials
Partnership to fund development of additional trial sites

It is anticipated that these trial sites may be ready in three years
 Challenges & Opportunities

Limited public sector financing to assist Low
income countries

Will lead to slower adoption of BCG replacement
vaccine

Booster vaccines will not be administered in low
income countries
− Costs exceed $1 per dose
Challenges
 Opportunities for innovation

Strong donor commitment to vaccine
development

Bill & Melinda Gates Foundation
− In 2004 invested $82.9 Mn through AERAS
− US is largest public provider of R&D support
− EU has made commitments

Most of these funds directed to basic research

Financing mechanisms such as Advance Market
Commitments (AMCs)
− G8 governments are considering this option

This would guarantee market for TB vaccines in developing
countries
 Opportunities for innovation

BVGH worked with World Bank & GAVI

To estimate size of AMC necessary to incentivize
industry
− BCG replacement: $360 Mn
− Booster: $3.8 bn

Partnering with emerging manufacturers

Would reduce development costs

GAVI: Global Association of Vaccine & Immunization

 Opportunities for innovation

Investment in new diagnostics

Availability of diagnostic would improve uptake of
booster vaccine
− As booster vaccine would not work on people already
infected with TB
− TB experts say that such diagnostic is technically feasible
& may be made available by the time vaccine reach
phase III
 Pipeline Diagnostics
Company Kit Phase
FIND/Tauns Co. Ltd. Capilia TB test Phase III
Sequella Transdermal TB Patch Phase III
TB DiagnosticIQ™: rapid
Tyrian Diagnostics /FIND antigen-based Preclinical
Mycobacterial
lipoarabinomannan (LAM)
FIND and partners antigen detection in urine Preclinical
FIND/Cepheid / UNDMJ GeneXpert System TB Preclinical
FIND/Eiken Chemical LAMP-based dx Preclinical
Serologic rapid TB test using
ChemBio/IDRI Dual Path Platform [DPP™] Discovery
FIND and partners Dipstick antibody test Discovery
FIND and partners Urinary NAAT Discovery
Conclusion
Thank You