Can outbreak infectious diseases compete for capital with non-communicable diseases and other profitable indications? The COVID-19 pandemic has shown that it is possible. During the pandemic, numerous biotech startups and large pharmaceutical companies have invested significant resources into developing vaccines, diagnostics, and therapeutics. These investments have not only saved millions of lives but also significantly boosted revenues and valuations for several companies in the industry. Consider a few examples, including Moderna, Pfizer, and BioNTech.
Now, mpox has become a new global health threat, and lessons from COVID-19 have demonstrated the importance and tools the biopharmaceutical industry has to work to prevent and respond to its spread.
The number of mpox cases and associated deaths continues to rise. There have been multiple mpox outbreaks around the world in 2022 and 2023, and a new, more dangerous strain called Clade Ib has emerged this year. Fortunately, there are some tools to prevent and treat the disease. Jynneos, manufactured by Bavarian Nordic, and ACAM2000, developed by Emergent BioSolutions, are FDA-approved mpox vaccines, and TPOXX (tecovirimat), originally approved for smallpox, has been repurposed and used off-label as the primary treatment for mpox.
The importance of government support
Despite the availability of these interventions, as illustrated by the recent clade Ib outbreak, investments in immunization research, development and manufacturing capacity have been largely reactive, with most resources mobilized only after strains began to spread outside endemic areas. Clade Ib cases began in the Democratic Republic of the Congo in late 2023, yet the first vaccine doses were only recently delivered to the country.
Contract-based orders drove vaccine and therapeutics procurement in 2022 and 2023. This included Bayer Nordic winning a $120 million contract from the U.S. government to manufacture Jynneos. In 2023, the Danish company reported nearly $1 billion in annual revenue, primarily from Jynneos sales. Additional contracts signed in the past year include a $157 million U.S. government contract for additional Jynneos doses and a $113 million order for TPOXX manufactured by SIGA Technologies, signaling significant revenue potential for companies in this space.
In addition to approved vaccines and therapeutics, there are also products in development, including TNX-801, a live replicative attenuated vaccine developed by Tonix Pharmaceuticals and Bilthoven Biologicals, and BNT166, a multivalent mRNA vaccine from BioNTech that is being funded by CEPI to the tune of up to $145 million. Despite these programs underway, existing market incentives appear insufficient to stimulate significant investment from pharmaceutical companies, and current government procurement and short-term stockpiling result in unpredictable revenue streams, creating uncertainty for developers and manufacturers.
Multiple factors could play pivotal roles in strengthening incentives for MPO investment. Governments should increase funding for MPO research and development and work toward establishing a multi-year stockpile supported by clear guidelines for procurement and supplier requirements. Additionally, policymakers could take steps to prioritize preventive vaccination for various at-risk populations. Close collaboration between public health experts, policymakers, and regulators will be crucial in informing policy decisions and could lead to recommendations that support vaccination of a broader population, mitigating the risk of future outbreaks while also encouraging capital investment in a more stable and predictable market.
Don’t miss the international market
Another valuable opportunity arises from markets outside of high-income countries. The recent announcement that WHO has prequalified Jynneos, making it the first mpox vaccine to receive such approval, is expected to lead to increased procurement in developing countries in the coming months. Until now, these regions have relied on donations from the United States and Japan. Gavi, a leading public-private partnership focused on vaccine access, recently approved its 2024 Vaccine Investment Strategy, which includes establishing an mpox vaccine stockpile by 2026. WHO estimates that $135 million in program funding will be required over the next six months to address the acute phase of the mpox outbreak, with funding needs expected to increase over time. While this opportunity may not be considered a “home run” market, it is important to recognize its significant public health value and potential for modest commercial upside.
In addition to government funding and policies, regulatory incentives will also have a significant impact on capital allocation in the biotech industry. Adding MPOX to the list of tropical diseases eligible for FDA Priority Review Vouchers (PRVs) could improve the financial return profile of these products. PRVs are transferable and have traded for prices of over $100 million over the past few years, with the most recent PRV selling for $158 million. Tonix Pharmaceuticals, which is developing the TNX-801 vaccine, has already proposed this addition and the industry and FDA will need to work together to make this a reality.
The resurgence of mpox in the wake of the COVID-19 pandemic should enable the pharmaceutical industry to mobilize sufficient resources to mitigate both current and potential future outbreaks. However, more efforts are needed to address this global health threat. Public health officials are struggling with inadequate resources, and the spread of Clade Ib outside of Africa, with the first cases reported in Sweden and Thailand last month, highlights the need for strengthened strategies globally. In the coming months, it will be important for regulators, policymakers, and public health experts to focus on freeing up funding for mpox research and development, clarifying procurement guidelines and budgets, encouraging multi-year stockpiling to increase demand predictability, and putting in place regulatory incentives to make mpox a more attractive investment opportunity.
