AssessingtheRiskandPoten0alofFutureVaccineMarketsClintonHealthAccessIni0a0ve(CHAI)DCVMNAnnualMee-ngBuenosAires,October2016
Agenda
1. Frameworkforassessingriskandpoten0aloffuturevaccinemarkets
2. Examplesofassessmentinputs
3. Illustra0veassessmentoutputs
4. Summary:“Knowthyself,knowthymarket”
Understanding key factors that drive expected return is needed to make investment decisions across disparate antigens (new or current) with multiple, shifting and non-quantifiable factors…
Probability of capturing return B
Low
High
Small Large
Poten-alreturndependson:• Poten0alrevenue:Needforvaccine,popula0onsize,fundingetc.• Poten0almargin:Geography,private/publicmarket,compe00on,etc.
Probabilityofrealizingreturndependson:• Developmentrisks• Poli0calsupport• Manufacturing&
deliveryneeds• Compe00vedynamics
Potential return A
Expectedreturn=Poten-alreturnXProbabilityofrealizingreturn
Lowermarketopportunity,lowfeasibility
“Longshots”
Lowpoten;alreturn,highfeasibility
“Cashcow/Quickwins”
Highmarketopportunity,low
feasibility
“High-risk/High-return”
Highpoten;alreturn,highfeasibility
“Toppriority”
Broadly,newan-genshavelesscompe--on-drivenrisk(i.e.,higherpoten-alreturnforearlyentrants),butalsohighertechnical,regulatoryandfundingrisks
A B
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… in addition, underlying management factors, e.g., competitive advantages, investment priorities, risk tolerances and long-term strategies, need to be taken into account
Man
agem
entcon
sidera;
ons Compe;;veAdvantages
• CoreR&Dcapabili0es• Manufacturingadvantage• Markets/channelsstrength• Func0onalexcellence
StrategicporFoliodecisions• Fiscallimits• Expansionvs.‘doublingdown’• Balancingpor]olio
Risktolerance • Companyrisklimitsandtolerance
Long-termstrategy• Businessunitgoals• Broadercompanystrategy
Assessingexpectedreturnandmanagementfactors(“knowthyself,knowthymarket”)enablecompaniesto• Riskop-miza-onandporPolio
balancing• Makeinformedgo/no-go‘best
guess’inhighlyuncertainandfluidspace
• Alignpipelinewithbroadercompanystrategy
Agenda
1. Frameworkforassessingriskandpoten0aloffuturevaccinemarkets
2. Examplesofassessmentinputs
3. Illustra0veassessmentoutputs
4. Summary:“Knowthyself,knowthymarket”
Macro level trends around unmet needs, funding and delivery, target populations and rate of commoditization have important implications for portfolio development EXAMPLES
Unmetneeds
Rapidglobaliza-onandcommodi-za-on
Fundinganddeliverychallenges
• Microbialresistancemakestreatmentincreasinglychallengingforbacterialdiseases
• Increasingawarenessofthethreatofepidemics
• Newmanufacturershaveimprovedcapabili-esandambi-onsforglobalmarketentry
• Expecta0onofvaccineequity&ac-vemarket-shapingbyglobalpartners
• Successfulentryoflow-costmanufacturers
• ~70%ofGavicohortscheduledtograduatebymid-late2020’s
• Poten0alforself-procuring
• Newpipelinevaccineso`entargetpopula0onsacrosshumanlife
• Partnerslookingtovaccinesevenforan-bio-c-treatablebacterialcondi-ons
• Increasingawarenessofthethreatofepidemicsandneedforvaccineasahealthsecuritytool
• Morerapidtransi0onfromdevelopmenttowidespreaduseinLMICmarkets
• Awarenessofglobalnatureofcompe00onlandscapeneeded
• NewdeliveryplaPormsfaceuptakerisks
Category Trend Implica;ons
• Pricesensi-vity• Poten0alfragmenta-onofmarketand
regulatoryrequirements
• Manyproductss0lldonotmeetLMICneedsonefficacyandpresenta0on
• Opportunitytoshi`largeLMICmarketswithop-mizeproducts
• Morerapidcommodi-za-on
Agenda
1. Frameworkforassessingriskandpoten0aloffuturevaccinemarkets
2. Examplesofassessmentinputs
3. Illustra0veassessmentoutputs
4. Summary:“Knowthyself,knowthymarket”
Assessing individual candidates for relative return and probability of success is not purely a science and the tool is meant to be the basis for debate/discussion
• Poten0alrevenue:Needforvaccine,popula0onsize,fundingprobability• Poten0almargin:Geography,private/public,compe00on
• Developmentrisks• Poli0calsupport• Manufacturing&delivery
needs• Compe00vedynamics• Management
considera0ons
Probabilityofrealizingreturn
Poten1alreturn
ILLUSTRATIVE
Current
Poten0al
Probabilityofcapturingreturn
High
Small Large
HIV
HepC
Shigella
RSV
MenACWY
Poten;alreturn
Dengue
Noro-virus
GBS
HPV2/4
NRRV
Low
HepE
Influenza
UnijectTd
BCG
Td
Part of the process is building hypotheses based on analyses about candidates, then testing key assumptions/hypotheses with experts and partners
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Extremelyhigh• Hugeunmetdiseaseburden• Diversemarkets• Veryhighpoli0calwillandfunding
poten0al
Poten-alreturn Probabilityofrealizingreturn
UnijectTd
HIVFollo
w-
me
Extremelylow• Veryhightechnicalrisks• Poten0allylargeinvestment• Adolescent/adultdelivery
Management&Conclusion
”Holdforfutureexplora-on”• Long-termopportunity• Interna0onalpartnerrela0ons
Low• NichemarketforMNTelimina0on• Somepoli0calwillandfundingpoten0al
Medium-Low• Modestinvestment• Short-0meline• Domes0cmarket• Maternaldelivery
“Quickwin”• Poten0alquickwin
High-risk/return Highpriority
NRR
V
High-medium• HighunmetneedinLMIC• Historicprecedentforpathogen-area
funding
Medium• High-mediuminvestment(EColipla]orm)• Domes0cmarket• Switchingrisks• Infantschedule
“Poten-al”• Highpoten0alvaccine• Poten0alforcombinedvaccines• EntrytoEDDmarkets
Noroviru
s Medium• Likelylargebutunquan0fiedunmetneed• Highlyinfec0ons,low/middleincomemarkets• Fundingasyetunclear
Medium• OnecandidateinPhaseIIIbutpipeline
scarce• Highinvestment
“Poten-al”(alternate)• Low-incomemarketversionneeded• Poten0alforcombinedvaccines• EntrytoEDDmarkets
ILLUSTRATIVE
Quickwins
Assessing individual candidates for relative return and probability of success is not purely a science and the tool is meant to be the basis for debate/discussion
• Poten0alrevenue:Needforvaccine,popula0onsize,fundingsource• Poten0almargin:Geography,compe00on
• Developmentrisks• Poli0calsupport• Manufacturing&delivery
needs• Compe00vedynamics• Management
considera0ons
Probabilityofrealizingreturn
Poten1alreturn
Probabilityofcapturingreturn
High
Small Large
HIV
HepC
Shigella
RSV
MenACWY
Poten;alreturn
ILLUSTRATIVE
Dengue
Noro-virus
GBS
HPV2/4
Current
Poten0al
Explore
Exclude
NRRV
Low
HepE
Influenza
UnijectTd
BCG
Td
Agenda
1. Frameworkforassessingriskandpoten0aloffuturevaccinemarkets
2. Examplesofassessmentinputs
3. Illustra0veassessmentoutputs
4. Summary:“Knowthyself,knowthymarket”
Morefocused,responsive,op-mized
porPolios
Summary: Know thy self, know thy market
Knowthyself,knowthy
enemymarkets,
Andyouwillnotbeimperiledina100
baMles1
1Adaptedfromquote” ”fromSunTzu’s“TheArtofWar”
1. Expectedreturn(“Knowthymarket”)
2. Managementconsidera0ons(“Knowthy
self”)• Compe;;veadvantages/weaknesses• BalancingtheporFolio• Risktolerance• Overallstrategy
• Clearlyar0cula0ngpriori0es• Discussionsonrela0veweightof
intangiblesandtes0ngkeyassump0ons• Engagementwithexpertsoncorefactors• Itera0veprocesswherekeyevents
triggeringreassessment
Expectedreturn=Poten;alreturnX
Probabilityofrealizingreturn
Structuretoassessexpectedreturnsandstrategicimplica-on
Processesandmarketintelligencetodrivetoop-mized,company-specificdecisions
Gracias por su atención Thankyouforyouralen0onObrigadopelasuaatenção여러분의 관심에 감사드립니다感谢您的关注உŋகllகவனt()*ந,-ध्यानदेनेकेलिएआपकाधन्यवाद\
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KevinHoAssociate
VinitaVishwanarayanSeniorAssociate
Kar-ckKumarSeniorManager
NineSteensmaAssociateDirector
JoshuaChuSeniorDirector
SourabhSob-Manager
SheldonXieDirector
LilyZengSenioranalyst
Contactforfollow-upqueries:YanfengLin,PhDSeniorTechnicalAdvisorClintonHealthAccessIni0a0ve(CHAI)[email protected]