Thank you.
I want to thank the Standing Committee on Science and Research for inviting me to testify today. My name is Henry Skinner. I'm a microbiologist, a life science investor and the CEO of the AMR Action Fund.
The AMR Action Fund is the world's largest venture capital fund solely dedicated to late-stage antimicrobial research and development. It was created in 2020 through a collaboration between the pharmaceutical industry and philanthropic organizations like the Wellcome Trust, which recognized that AMR is a fast-moving threat that imperils the health of everyone and could cost the global economy trillions of dollars.
My fund is trying to mitigate this threat and protect patients by investing in small and mid-sized companies that are developing urgently needed therapeutics for the most dangerous drug-resistant bacteria and fungi, which the WHO and the CDC call “priority pathogens”.
I have been investing in biotechnology companies for 25 years, and the decline in investment and innovation in the field of antibiotics is alarming. Like most venture capital funds, we are structured to exist for approximately 10 years, which we hope is enough time for policy-makers around the world to enact appropriately sized incentives and to correct the market values that make discovering and developing new antimicrobial treatments nearly impossible, as highlighted by the Council of Canadian Academies report of September 2023.
We focus our investments on biotechnology companies that are conducting clinical trials in humans to test for safety and efficacy, which is the stage of drug development where the costs are highest and where the need for external funding is most acute. While the fund has approximately $1 billion U.S. under management, a single clinical trial can cost several hundred million dollars, so we must be extremely selective with our investments. Our goal is to bring two to four novel antimicrobials to market by 2030. So far, we've made 12 investments and have obtained one antibiotic approval. To date, however, we've not invested in any Canadian companies, and that's not a reflection of Canadian innovation. In fact, there are some promising R and D programs across the country, especially in the earlier stages, with labs leveraging machine learning and AI to aid antibiotic discovery efforts.
However, all antimicrobial developers, whether they're based in Edmonton, Boston or Lyon, are up against extraordinary market challenges that make it exceedingly difficult to attract investors. In all other therapeutic areas, the market rewards innovation through sales volume, which means delivering cholesterol pills, cancer medicines or obesity shots to every patient who could benefit. Due to the way bacteria and fungi evolve, though, clinicians are instructed to use new antimicrobials only when absolutely necessary in order to preserve the drug's effectiveness, and they hope that resistance takes longer to build. This is necessary for public health, but it makes it exceedingly difficult for investors and companies to justify spending money on antibiotic research and development. Antibiotics are not blockbusters. Sales of the top 10 antibacterial products don't even add up to $1 billion. In comparison, a single cancer drug can generate more than $20 billion in sales in a single year.
Antibiotic research and development is incompatible with the fiduciary responsibilities of private investors, who need to generate returns. Each year, venture funds invest tens of billions of dollars into biotech companies, but less than 0.1% of that money is invested in companies developing antibiotics. This represents the classic tragedy of the commons, which only government policy, including Canada's, can address. At the same time, it will make their biotechnology sectors more attractive to private investors. Policies known as pull incentives can change how antibiotics are valued and reimbursed, and they can reward companies that take the risk and are successful in developing new, urgently needed antibiotics for patients in need.
Pull incentives have been successfully piloted in England over the last several years for two novel antibiotics, and a permanent program will now cover more antibiotics and expand across the United Kingdom. As Italy finished its G7 presidency last year, the Italian Senate authorized the use of up to 100 million euros for higher reimbursement of innovative antibiotics. To date, eight medicines are included in that program.
However, a pull incentive in the United Kingdom or Italy alone is not sufficient to attract investment in antibiotic drug developers. The programs in the U.K. and Italy must be joined by other G7 markets like the U.S., Japan and Canada, as well as the entire European Union. Only then will pull incentives reach the size necessary to assure investors and drug developers that antibiotics are a financially viable field of medicine.
As you know, in the Government of Canada's 2023 budget, Canada committed to develop a pilot program to secure access to new antimicrobials for the people of Canada. It is important that the Government of Canada move this forward and make a financial commitment that truly rewards innovation. By valuing these new projects appropriately, the program would encounter greater participation in the pilot and lay the groundwork for a sustainable national program. Canada has a moral responsibility to contribute its fair share as a G7 member and high-income country. I feel the same about Japan’s inadequate pilot program.
I believe the design of the pilot should address barriers at the hospital level to providing access to new and newer antimicrobials. Taking pressure off the hospital budget, coupled with the appropriate stewardship protocols, would ensure that the program would succeed in getting the right drug for the right patient at the right time.
Effective antibiotics are essential to a functional and efficient health care system in each province and territory. When used appropriately, they enable and reduce the cost of providing high-quality health care.
Thank you very much for inviting me to testify. I look forward to answering your questions.