World Bank HIV Vaccine Industry Study: Draft Summary

of them without human trials. Safety issues around a retrovirus with 97% mortality
have prevented the testing of live attenuated or whole killed candidates. The ability
of the virus to mutate whilst remaining pathogenic has prevented first generation
recombinant candidates entering efficacy trials, although an improved recombinant
product recently did so. The bulk of vaccine efforts today are focused on approaches
which have few or no current vaccine analogues.
This scientific uncertainty is compounded by the fact that current limited
understanding of the virus, a lack of correlates of immunity and available animal
models means that there is a higher degree of uncertainty as to efficacy than is typical
of a vaccine candidate prior to performing Phase 3 trials. This is important given that
Phase 3 trials are very expensive to conduct ($30m was a frequently quoted figure),
and often also involve investment in manufacturing plant, also costing tens of millions
of dollars. All or most of this investment is lost if a commercial product does not
result from efficacy trials.
This creates a vicious circle, since Phase 3 efficacy trials are an effective way of
advancing knowledge to the point where such trials would a more attractive
commercial proposition. Our view today is that very few companies have sufficient
confidence in their candidates to risk the required amounts of money in the near
future.
Nearly all the smaller companies we interviewed cited difficulty in raising capital as a
major barrier. Indeed, most of the smaller companies either limited their activity in
HIV vaccines to what grants from the public sector would pay for, or relied on other
activities to attract investment and pursued HIV vaccine research in a low-profile
fashion. In our opinion, the difficulties faced by the small companies in raising
finance are symptomatic of the lack of confidence of the larger companies. This is
because large companies are a major source of investment in smaller companies, and
arguably give a lead to the venture capital markets.
Impact of a LDC market guarantee mechanism
Given the level of concern over non-market barriers, it is unsurprising that most
companies were cautious about the value of a LDC market guarantee mechanism.
Only one company took the view that the existence of such a mechanism would
permit a significant increase in development expenditure. The remainder felt that
such a mechanism would be welcome, would generate positive publicity and might
have a small incremental impact on activity levels, However, the emphasis of their
comments was heavily biased towards reducing the levels of risk involved in HIV
vaccine development rather than increasing the potential reward.
We see three possible reasons why increasing the reward might not increase the
investment and thus the risk companies are willing to take. First, some companies
currently perceive the absolute probability of success as too low, making the size of
the reward irrelevant. Second, for most companies, the perceived timeline to
commercial revenue is so long that the reward is heavily discounted and ultimately

not the primary driver of decision-making. Third, companies active in supplying the
LDC market with today's vaccines regard that market, and the public sector role in it,