by Patrick Cox
August 14, 2014

The current Ebola epidemic has already claimed more victims than any prior outbreak of this particularly gruesome disease. Properly called Ebola hemorrhagic fever (EHF), the virus damages the cells it hijacks so badly that victims often bleed from every opening of the body. From half to 90% of those who contract the virus die and, given that some countries are underreporting infections, there are probably over a thousand deaths this year.

As the virus spreads across national borders, media coverage has begun to resemble trailers for horror movies. Tom Frieden, head of the US Centers for Disease Control and Prevention, told a House Subcommittee that it was inevitable that Ebola would make it to America. American border patrol agents, already stressed by unprecedented levels of tuberculosis and other diseases coming in from Mexico, are now worried about the arrival of Ebola from Africa. In the United Kingdom, border agents have threatened to strike if flights continue from infected regions.

Predictably, a lot of people are demanding that somebody “do something” to help Ebola victims. In Africa, reactions often run more toward anger than concern because two American missionaries were given access to ZMapp, a monoclonal antibody drug under development by Mapp Biopharmaceutical of San Diego. Dr. Tolbert Nyenswah, Liberia’s assistant health minister, told the Wall Street Journal: “The population here is asking: ‘You said there was no cure for Ebola, but the Americans are curing it?’”

Just as predictably, and I did predict it, regulators are responding to the perceived crisis by reducing the burdens placed on new Ebola drug candidates. The FDA lifted the hold it had placed, only weeks before, on clinical testing of a drug by the Canadian biotech Tekmira Pharmaceuticals, which was awarded $140 million by the Department of Defense to develop a small interfering RNA drug. The FDA’s change of heart helped push up the company’s stock price.

BioCryst Pharmaceuticals of North Carolina, also developing an Ebola drug, has also benefited from investor interest due to the FDA’s recently cooperative attitude. MAPP Biopharmaceutical, the company that produced the experimental drug taken by the two missionaries, has been awarded additional funds by the Defense Threat Reduction Agency. Its stock has also surged.

Just as the FDA has adapted to public sentiment, the World Health Organization, which exercises control over the transfer of experimental drugs across national borders, is also becoming less combative toward Ebola drug developers. Before the outbreak, Western pharmaceutical companies were often accused of wanting to use third-world patients as guinea pigs. Now we’re hearing that Western drug makers are greedy hoarders for not making experimental drugs available to the developing world. This may happen.

I wrote in a recent commentary here that the regulatory regime is antagonistic to new drugs. Extreme caution is enforced via guidelines and requirements that impose enormous costs on innovators. In theory, it may be good to apply the highest safety and efficacy standards to new drug candidates. In practice, however, considerable scholarship shows that the obstacle course harms more people than it saves.

The FDA admits implicitly that this is the case when it changes policy in the face of public pressure. The reversal of the hold on Tekmira’s TKM-Ebola drug candidate is just a recent example.

I have no desire or intention to demonize the people at the FDA. Corruption exists in every large government agency, but most regulators are simply responding to the institutional incentives created by legislators. Nevertheless, it’s useful to ask why it made sense, one week, to halt an Ebola drug’s progression because of marginal safety concerns. Then, weeks later, it made sense to ease the regulatory burdens keeping the drug from Ebola victims, who have more than a fifty/fifty chance of dying painfully after oozing blood from their eyes and other orifices.

In fact, nothing changed except public attitudes. Regulators can’t even honestly say they were surprised by the current outbreak. We knew this was coming, though not exactly when. Anybody with a glancing familiarity with Ebola knows the cyclical nature of virus-borne disease epidemics.

Currently, Ebola does not pose as much of a threat as many believe. This is because, so far, airborne infection isn’t taking place. The virus is difficult to contract, spread primarily by direct contact with victims who exude the virus due to hemorrhaging. Those who catch the disease are probably transferring the virus to some mucous membrane, typically by touching the eyes.

Ironically, the lethality of the disease also acts to reduce contagion. Ebola victims can spread the disease for a relatively short time before debilitating symptoms demand attention and quarantine, at least in the West.

An Even More Lethal Virus

The big worry, however, is that Ebola could mutate and become much more communicable. The virus already exists in at least four forms and it happens routinely with other viruses, including influenzas. You don’t need a bioterrorist lab when birds, fruit bats, sea lions, and pigs are sharing pathogens in real time.

The World Health Organization knows all this, as does the FDA and other national drug regulatory agencies. If the risk/reward calculation justifies easing of regulatory hurdles now, the same has been true for years.

If you’re reading this from the relative security of a Western country, you might think that this regulatory schizophrenia doesn’t threaten you. If so, I’d like to walk you through a thought experiment.

Let’s imagine that Ebola undergoes a mutation that increases its ability to spread, probably via interaction between bird and pig populations. Pretend that it then kills, on average, 40,000 to 50,000 Americans and at least a quarter million people globally every year.

Do you assume that politicians and regulators would then recognize the need to reduce the cost (typically hundreds of millions of dollars) and the time frame (generally a decade or longer) of drug approval? Would the paradigm then shift from avoiding risk to rewarding regulators who can find effective treatments?

Now let’s up the ante. Let’s suppose that virologists say this new disease is likely to undergo further mutations and periodically kill many millions of people in pandemics comparable to the Black Death.

This is a trick question, of course. The disease I just described is the flu, a far greater threat to mankind and you personally than Ebola. So why are Ebola drug candidates being given better treatment than influenza drugs? Perhaps it is because, as Stalin reportedly said, one death is a tragedy but a million deaths is a statistic.

Influenza has, in fact, already killed millions. Moreover, every virologist and epidemiologist knows that a truly terrifying mutation of a flu virus is evolving right now in the wild. It will not only put millions of people in the grave, hitting medical professionals hardest, it will knock global GDP down by three to five points. It’s coming. There’s nothing we can do about it.

Oh wait. There are things we could do to accelerate remarkable new influenza drugs, currently in development, to market. We’re just not doing them. But we will when the pandemic hits, just as is being done in response to the Ebola outbreak. At which point, unfortunately, it may be too late to avoid needless deaths on the scale of a major war.

We need to reform the drug regulatory system for a variety of reasons, but our species, I’ve noticed, is largely incapable of logical extrapolation. This may be particularly true of the political serotypes. Fortunately, there are some people, scientists and investors, who look to the future with clear eyes. These extraordinary individuals are working on transformational biotechnologies that will, I predict, end influenza’s lethal power in our lifetime.

Why We Should Follow the Money, Not an Ebola Cure

Utterly new biosciences have emerged almost unnoticed in the last decade. Several are being brought to bear by brilliant scientists dedicated to curing virus-borne disease. Though preclinical work by these companies is never mentioned in the mainstream media’s coverage of forthcoming antivirus drugs, they are game changers.

Last week, I talked at length with one of these scientists about Ebola. Having watched his science progress for years, I have little doubt that his team could design a cure, not a vaccine, for any virus-borne disease in the space of a few months. These revolutionary drugs will kill viruses so effectively that symptoms would go away in the course of a few hours, leaving infected individuals with little more than memories and an acquired immunity to future infections.

I won’t identify the scientist or the company here for several reasons. One is that his comments and refusal to turn the company toward an Ebola drug would be misinterpreted as callous and maybe even racist. The truth, however, is that he told me he has no intention of going anywhere near the tar pit of Ebola politics.

From a pure business perspective, the Ebola market is tiny compared to other viral diseases like influenza and herpes. Influenza, in particular, could infect nearly the entire human population, which also defines the market for an effective influenza drug. The customer base for Ebola, on the other hand, is basically governments, which means that the terms of any deal will be perused and criticized by ideologues incapable of doing actually useful work.

Moreover, governments have done a terrible job historically of identifying effective experimental drugs. Too often, large contracts seem to have been awarded to friends of administrations in a pattern of crony capitalism. This means that a company that shifted gears to address Ebola could find that its efforts were wasted.

These are all reasons, by the way, that I’ve never chased an Ebola stock despite the kind of short-term spikes in valuation that we’ve been seeing. I’m much more interested in a company that can prove it has an effective cure for influenza and sell to the global market for many years. Billions in revenues would be generated annually, driving stock prices far above those that could be achieved via rare diseases like Ebola.

Interestingly, this demonstrates the market economist’s dictum that unimpeded money flows to its optimal use. Ebola is a tragedy, but startup biotechs almost never have the resources to pursue multiple drugs, each costing hundreds of millions to get to market over many years.

I’m glad that the most advanced biotechs are targeting influenza rather than Ebola, for humanitarian reasons alone. Granted, an effective flu drug will also make fortunes for a lot of people, but this is how it should be.

— Patrick Cox is editor of Transformational Technology Alert.