Accelerating Vaccine Innovation for Emerging Infectious Diseases via Parallel Discovery

The portfolio approach of financing drug development has been proposed as a financial innovation to improve the risk/return tradeoff of investment in drug development projects through the use of diversification and securitization. By investing in a sizable and well-diversified portfolio of novel drug candidates, and issuing equity and securitized debt based on this portfolio, the financial performance of such a biomedical “megafund” can be made attractive to a wide group of investors in the private sector. To analyze the viability of the portfolio approach in expediting vaccine development against emerging infectious diseases, we simulate the financial performance of a hypothetical vaccine megafund consisting of 120 mRNA vaccine candidates in the preclinical stage, which target 11 emerging infectious diseases, including a hypothetical “disease X,” which may cause the next global pandemic. We calibrate the simulation parameters with input from domain experts in mRNA technology and an extensive literature review. We find that this vaccine portfolio will generate an average annualized return on investment of −6.0% per annum and a negative net present value of −$9.5 billion, despite the scientific advantages of mRNA technology and the financial benefits of diversification. We also show that clinical trial costs account for 94% of the total investment, while vaccine manufacturing costs account for only 6%. The most important factor of the megafund's financial performance is the price per vaccine dose, while other factors, such as the increased probability of success due to mRNA technology, the size of the megafund portfolio, and the possibility of conducting human challenge trials do not significantly improve its financial performance. Our results illustrate the critical importance of government funding to ensure that vaccine development will be financially sustainable for the private sector and that effective vaccines will be available to prevent the next global pandemic