The Imaginations of Unreasonable Men (20 page)

Steve Hoffman has done no less. Sanaria’s live, attenuated sporozoite vaccine comes directly from nature’s book, and by meticulously recreating the immunity that is triggered upon the accumulation of 1,000 mosquito bites, it may mirror nature in its purest form.

After three decades of experimenting with recombinant DNA technology, which is engineered through the combination of one or more DNA strands that would not normally occur together, Hoffman is pioneering a return to first principles, and especially to the kind of natural solutions Gaudi sought out.

Paradoxically, nature’s purity is so complex that recreating its essence requires an engineering technology of mind-boggling sophistication. That’s what Sanaria has invented. Using biomolecular jujitsu, Hoffman has managed to turn the parasite’s strengths against itself. As if adopting Gaudi’s famous phrase that “originality is returning to the origin,”
Hoffman returned to the origins of the Nussenzweigs’ work of an earlier generation. If it works, it will be the salvation of generations to come. The applause heard within the space of just a few days—from Seattle for Melinda Gates to Maryland for Steve Hoffman—was the sound of history accelerating.

What could the sex lives of algae have to do with finding a vaccine for malaria and other parasitic diseases? Quite a lot, it seems, because pond algae and the mosquito-borne
Plasmodium
parasite that causes malaria turn out to use the same protein to fuse their male and female gametes during sexual reproduction.

William Snell at the University of Texas Southwestern Medical Center in Dallas and colleagues discovered that . . . when [the protein]
HAP2
was knocked out in
Plasmodium
, mosquitoes failed to spread malaria between mice. . . .

A vaccine designed to block
HAP2
could break
Plasmodium’
s reproductive cycle in people infected with malaria and so prevent its transmission to others.

—“Algal Sex Could Spawn Malaria Vaccine,”
New Scientist
, April 20, 2008

 

 

 

O
F THE WIDE VARIETY OF approaches being tried to eradicate malaria, some are mainstream, many not, but almost all fall into one of three categories: vaccination of those who have not had malaria, medication for those who
do have it, or prevention through bed nets, spraying, and the like.

One reason there are so many approaches is that the problem has been so intractable. Another reason is that there is no natural market for the solutions that would serve to control them. Markets not only deliver capital and resources, they do so in ways that are efficient. Foundations, which are insulated from market forces, do not. Most nonprofits were established in response to a market failure. Whether providing health care to new immigrants, food to the hungry, or teachers and principals to inner-city schools, nonprofits fill gaps left by either the marketplace or the government because economic or political incentives to fill them were lacking. The typical fate of many good ideas in the nonprofit sector is initial popular support that fuels short-term growth, followed by gradual, long-term growth stymied by lack of sustainable resources.

But changes are afoot in the nonprofit world, and it is no longer business (or philanthropy) as usual. Advocates for the use of market mechanisms to accomplish social objectives have grown in number and now include Bill Gates. In a 2007 Harvard commencement address that called for “a more creative capitalism,” Gates proposed that we “stretch the reach of market forces so that more people can make a profit, or at least make a living, serving people who are suffering from the worst inequities.”
¹

Gates did not explain what he meant by “stretch the reach of market forces.” He never mentioned “social entrepreneurship.”
But some of the Gates Foundation grants and grant partners are illustrative of the concept and can give us a glimpse of a future for nonprofits that harnesses market forces and thereby allows them to achieve more than ever before.

A prime example is the foundation’s investment in GAVI (formerly known as the Global Alliance for Vaccines and Immunization), which develops vaccines for HIV, malaria, and tuberculosis and improves access to these vaccines for children in poor countries. Gates and GAVI helped to create a new financing mechanism by which foundations and industrialized nations promise to subsidize the future purchase of a vaccine not yet available (up to a predetermined price). Called Advance Market Commitment, the mechanism is designed to encourage potential suppliers to invest in the R&D and production capacity needed to develop and manufacture the vaccines. They will be more likely to make that investment, in other words, if they know there will be a viable market for the end product. It is philanthropic spending intentionally designed to leverage commercial investment.

Gates’s strategy with GAVI recognizes that the qualities that make for visionary and intrepid scientists are anathema to marketeers. Great scientists are willing to face down hundreds of years of failure in pursuit of the ultimate game-changing success, whereas marketeers, able to perceive the appetites and enthusiasms of the general public today, are less interested in the ill-defined appetites and enthusiasms of an unknown future. Scientists capable of making breakthrough
discoveries are often idealists; marketeers are usually pragmatists. The scientists behind breakthrough discoveries are visionaries; marketeers look at the bottom line. Gates realized that he needed to support, even create, a market mechanism for the visionaries, whose general detachment from the mass market made them indifferent, if not ignorant, to many practical considerations.

New Yorker
writer James Surowiecki described the impact and the rationale for such an approach:

What Gates and others are nurturing is a new kind of nonprofit that strategically repositions itself and directs its energies toward long-term market solutions. By this logic, an NGO, or nongovernmental organization, becomes an MDO, or “market-directed organization.” Hoffman has positioned Sanaria as just such an enterprise. Even though it is a for-profit biotech company, it has been capitalized by philanthropic dollars. Its future investment is dependent not only on effective clinical trial results but on the kind of profitable market, made up of military personnel, tourists, and business travelers, that Hoffman estimates to be worth billions of dollars.

Some nonprofits are taking a less extreme path. To supplement their fundraising, they are leveraging their assets and creating profitable revenue streams through the sale of goods and services, engaging in cause-related marketing partnerships. A market-directed organization goes beyond that trend, taking steps that make it more conducive for markets to act responsively toward it. They are developing metrics to assess return on investment and instill accountability, for example, and ensuring greater transparency about impact. They are also pursuing financing strategies that include the use of debt and equity and paying attention to long-term capacity building to create built-to-last organizations.

For even the most well-intentioned NGOs, none of this comes naturally. But a variety of strategies has already emerged from the new breed of nonprofits remaking themselves as MDOs. In addition to the efforts described above, these include:

Each of these efforts is very different from the others, and yet there is a common thread. What they all share is the attempt to redress the shortcomings of the philanthropic marketplace—the fact that philanthropy typically is not responsive to performance in the same way that capital markets are. Other mechanisms must be developed if nonprofits are to be responsive, and so, as Gates said, we must “stretch the reach of market forces” to address social needs.

Not every nonprofit needs to concern itself with transforming into an MDO. Many small, local efforts to expand a cultural institution, to promote better environmental
practices, or to support neighbors in need could well thrive on charitable support alone. But when it comes to solving complex national and international problems, addressing root causes and not just symptoms, then some alignment with market forces designed to attract more capital is likely to be a necessity.

To create the malaria vaccine that has long eluded tropical disease specialists, it is not enough to be an expert in infectious disease, parisitology, molecular biology, and genetic engineering, or even to have assembled the best talent in each of those fields. Nor is it enough to have access to the best laboratory and research equipment. Medical knowledge and scientific achievement represent just one aspect of what is needed.

At an initial cost of $400 million to $500 million to bring a vaccine from laboratory discovery through clinical trials and production, vaccine development is big business. As such, it requires—in addition to scientific knowledge—expertise in corporate finance, venture capital, IPOs, engineering and manufacturing, and supply-chain management. The physicians and researchers who care about vaccines for neglected diseases and drive their development almost never have training in those disciplines. Steve Hoffman is no exception. That is what brought him, before his Gates funding came through, to the Madison Avenue office of legendary investor and philanthropist Ray Chambers on a sunny spring morning
in New York City. That, and the fact that by December 2009 he was expecting to run out of money.

Ray Chambers had made his fortune at Wesray Capital, the New York City firm where he had masterminded the leveraged buy-outs of Gibson Greeting Card and Avis Rent-A-Car in the early 1980s. He had then turned his attention to philanthropy, both in his hometown of Newark and around the world. He had a penchant for investing in for-profit activities that had a social impact, precisely because they were more sustainable as for-profits.

It was a big week for Steve Hoffman. That night he expected to see his colleague, malaria researcher Pedro Alonso, who was in the United States for a visit from his post in Barcelona. Alonso was then the lead investigator for the clinical trials on the RTS,S vaccine. The results of the Mozambique trials were considered promising, although almost everyone in the field found them to be preliminary, at best. Nevertheless, it was the hot prospect, generating press and buzz and dollars.

Hoffman had known Alonso for a long time, and it was clear he respected Alonso’s ability to command so much attention and support. “He’s a great medical and scientific entrepreneur,” Hoffman told me. “But I think what Pedro really wants is to test our vaccine. He knows RTS,S is a first-generation vaccine that is only partially effective. So when people ask what I think about their trials and the vaccine clinics they are setting up with the $105 million grant from Gates, I say, it’s great, because those clinics will be there for others to use later.”