The Covid-19 pandemic has pushed vaccines and public health to the forefront of people’s minds. Investment and research in these areas have rocketed in recent months, but will such interest continue long into the future? Glenn Rockman, founder and Managing Partner of Adjuvant Capital, a VC firm investing in the infectious disease area, believes it will.
Rockman did not plan to get into life science investing. With a background in public policy and an interest in economics and finance, he decided to go into banking after leaving university.
“I went to work at a big investment bank, JP Morgan, but I didn’t do traditional banking. My clients were limited to what we call ‘mission-driven organizations’ that have a social purpose on top of their institutional purpose.”
Many organizations fall within this realm, including universities, art museums, and research institutes. But few are as large or as well known as the Bill & Melinda Gates Foundation, which became one of Rockman’s best clients.
“One of their biggest priorities was finding a way to convince traditional life science investors that there was an overlooked profit and social impact opportunity in neglected public health challenges, which they predominantly defined as high-burden and neglected infectious diseases,” he explained.
“Not being very creative as bankers, we said, ‘well, why don’t you sponsor the creation of an investment fund and demonstrate that you can have your cake and eat it too. Earn a healthy financial return and also save and improve lives around the world with new technologies that might otherwise never have come to market.’”
Inspired by the work of the Gates Foundation, Rockman took up an opportunity to work at the fund he helped create — the Global Health Investment Fund — and left JP Morgan. The fund was set up to finance the development of drugs, vaccines, diagnostics, and other health interventions to fight diseases like HIV, tuberculosis, and malaria, which have the biggest impact in low- and middle-income countries.
In 2018, Rockman co-founded a new life science investment company called Adjuvant Capital, which spun out of the Global Health Investment Fund. “What Adjuvant is doing is simply taking everything we learned at the Global Health Investment Fund and trying to scale that up,” he explained.
Many investors have been put off from funding public health challenges in the past, particularly those with a large burden in the developing world, due to a lack of return on investment in this sector.
However, Rockman believes that this is very much a perceived rather than a real problem and that it is also possible to make decent returns while helping the people that need it.
“It’s true that many of the people we want to help with these new drugs, vaccines, and diagnostics live on a few dollars a day. But their health systems… have the budgets that can allow for the procurement of essential vaccines and increasingly want to make sure that they have the best and most affordable new interventions.”
Due to the ongoing Covid-19 pandemic, there has been unprecedented interest from many VCs, big pharma companies, and others in investing in the infectious disease space. As someone who knows this area well, Rockman is well placed to advise his portfolio companies on whether or not to get into infectious diseases and to decide whether to make new investments in Covid-19.
“Our focus, as fiduciaries and not wanting to put ourselves out of business, has been on what we call ‘de-risked technologies’, things that have shown some degree of safety and efficacy in other indications and that are less likely to fail,” he noted.
An example of a successful investment Adjuvant made in this area was in Austrian biotech Themis Bioscience, which was acquired by MSD in May after announcing it would develop a vaccine for Covid-19 in March. Themis’ vaccine technology had so far been validated up to phase II clinical trials with a vaccine for the Chikungunya virus.
While Rockman is keen to support efforts to combat Covid-19, he urges caution both for biotechs wanting to develop products and potential investors in this space. “There’s still a very high risk and many of the 130 plus vaccine candidates currently under development for Covid-19 will ultimately fail.”
Rockman explained that there is a window of 18 to 24 months until the first successful vaccines are likely to appear. “If you’re so early or your technology is so unproven that you can’t conceivably come to market in that window, it’s probably going to be difficult to raise the capital or to put your own dollars at risk to move something forward.”
This kind of widespread interest in infectious diseases has soon waned in the past, such as after the 2014 Ebola epidemic. However, Rockman believes the current intense interest in improving public health and pandemic preparedness associated with Covid-19 will last long into the future.
“I could see the private side interest in pandemic preparedness tapering off, but I think every major government around the world will have a longer memory of what this did to their economy and what it did to their populations.”
“You’ll see lots more research and development spending, more stockpiling efforts to prepare for the next potential outbreak, and all of that will create an environment that is much more favorable to the type of investing that we do.”
Despite this, Rockman believes it’s important not to focus solely on Covid-19. “Even though pandemic threats have always been a part of our investment strategy, we don’t want to become a 100% Covid-19 investment company overnight, we want to maintain a diversified portfolio, and there are lots of other public health challenges that haven’t gone away as a result of this.”
Adjuvant has closed three investments since March, none of which are anchored by Covid-19. One area Rockman thinks shows particular promise is next generation antimicrobials designed to solve problems that have been generated by antimicrobial resistance.
“Despite the industry not being super commercially positive about the opportunity, we’re a bit contrarian and we think there’s some upside there.”
Indeed, having a broad spectrum approach to pandemic preparedness makes good sense. Although much has been and will be learned from the Covid-19 pandemic, it’s hard to predict exactly where the next epidemic or pandemic will come from with any accuracy.
“The problem is, the next threat could be bacterial, or it could be a parasite, or it could be an entirely different family of viruses. So there’s no way, I think, to have all this turn-key and ready to go. But we’re certainly developing a much better fundamental understanding and a renewed interest in vaccines, which has been a sleepy corner of the market for a very long time.”