August 2015
 THE NEW EBOLA VACCINE: 
A CASE STUDY IN SUSTAINABLE INNOVATION
  
  
The announcement that Canadian research had produced a vaccine that can prevent Ebola 100% of the time with very few side effects is monumental. 
The vaccine, known as rVSV-ZEBOV, was tested on more than 4,000 people who had been in close contact with a confirmed Ebola case in Guinea.
 
Over 11,000 persons had died since the world's biggest outbreak of Ebola began in 2014.
 
Of those who received the new Ebola vaccine within 10 days of being identified as an Ebola contact, there were no cases of the disease.
 
"It looks to be about as safe as a flu vaccine," said Ben Neuman, a virologist at the University of Reading who was not part of the trial. Researchers are still assessing possible side effects; the most serious seemed to be fever and the stress experienced by patients who believe such symptoms were due to Ebola.
The vaccine was developed at the Public Health Agency of Canada's National Microbiology Laboratory (NML) in Winnipeg under the direction of Dr. Gary Kobinger. 
 
Dr. Heinz Feldmann had struggled for years at the NML to try to find a way to prove that the vaccine would work as well in people as it does in non-human primates.
 
The research involved a recombinant, replication-competent vesicular stomatitis virus-based vaccine expressing a surface glycoprotein of Zaire Ebolavirus (rVSV-ZEBOV).
 
The scientific work at the Public Health Agency of Canada was critical because researchers recognized the fragment of the Ebola virus most likely to spark a protective immune response, the first step in developing a vaccine.
 
"We are proud of the work done by Public Health Agency of Canada scientists that led to the development of the vaccine and hope that it can be used as a global resource to help save lives and end the outbreak in West Africa," Canada's Health Minister Rona Ambrose said.
 
The former director of the Canada's National Microbiology Laboratory in Winnipeg where the vaccine was designed, Dr. Frank Plummer, was ecstatic about the news.
The vaccine candidate was originally funded and developed by the Public Health Agency of Canada's National Microbiology Laboratory.
 
It was licensed to US based NewLink Genetics in 2010 (NASDAQ:NLNK).
 
NewLink is a successful bio-pharmaceutical company focused on discovering, developing and commercializing novel immuno-oncology products to improve treatment options for patients with cancer. The vaccine initiative was non-core for NewLink.
 
On Nov. 24, 2014, Merck and NewLink Genetics announced an exclusive licensing and collaboration agreement for the investigational Ebola vaccine.
 
Funding for the Ebola vaccine trial in Guinea came from the Wellcome Trust, Norway, Canada, WHO, and Doctors without Borders. NewLink Genetics and Merck (known as MSD outside the United States and Canada).
 
NewLink Genetics has been commercially successful and expects to have more than US$160 million in cash and equivalents on December 31, 2015.

DISCUSSION:

SUSTAINABLE INNOVATION IN CANADA?            

                               
The Canadian government funded the research that lead to the development of the ebola vaccine.
 
Let's assume that the research cost the Canadian government about $30M in direct and indirect costs over 15 years. It likely cost more.
 
In 2010, the intellectual property was licensed by NewLink Genetics which is a private US based biotech company.  Let's assume that NewLink paid $5M to 10M for the exclusive license for the ebola vaccine.
 
The Canadian government did not choose to donate the intellectual property to the world. The Canadian government engaged in a private sector transaction.
 
In 2014, Merck pharma licensed the vaccine from NewLink. Let's assume that NewLink will earn $300M for this exclusive license. It likely will be higher.
 
We are estimating that the long term economic return to Merck for this vaccine might be $3B or more.
 
If the $300M earned by NewLink or the $3B earned by Merck had stayed in Canada, then that capital might have been re-invested in developing talent and generating jobs, research and innovation within Canada. The entire process would have been a stellar example of sustainable innovation in action.
 
With such a commercialization strategy previously in place, the "old" Connaught labs would likely have become the global manufacturer of the ebola vaccine.
 

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           Raymond Rupert MD. MBA.
           Founder/Medical Director
           Rupert Case Management Inc.
           505 Eglinton Avenue West, Suite 203
           Toronto, ON M5N 1B1
           direct:     647-350-5500
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           email: info@rupertcasemanagement.com
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