HEAL Bond on Blockchain is a collaborative approach to curing HIV, which uses blockchain technology as a tool to provide 100% transparency of accumulation and distribution of funding.
Currently, the 37 IMF advanced economies spend over $66bn per year in cash on HIV/AIDS. HEAL Bond is a social impact bond, in which a commitment is made to pay for improved social outcomes that may result in vast future public sector savings. It is modelled on the Gavi "vaccine bond" to provide funding for vaccines in developing countries, which brought together the vaccine industry with the likes of the World Bank and the Bill & Melinda Gates Foundation. Since 2006, the Gavi bond has so far raised $5.5bn with another $7.5bn in commitments.
The HEAL Bond, which improves on the Gavi model with blockchain and IP commons components, hopes to ultimately raise up to $10.2bn. HEAL Bond on Blockchain was presented at the recent SWIFT Business Forum London, because the technology is now entering Phase-II of testing – being at the testing stage, the project is not currently an offer to invest.
Peter A. Jensen, CEO, Finclusion Systems, the Lead Blockchain Arranger and Blockchain Service Provider (BSP) for HEAL Bond on Blockchain issuance by HEAL Alliance, told IBTimes: "The HEAL Bond has been in development for well over four years at HEAL Alliance, and along came blockchain technology some years ago which creates a unique opportunity to ultimately go-direct-to-market with a regulatory compliant offering on blockchain."
"We have a collective and a collaborative model for Heal Alliance; that's what it's all about. And of course blockchain is an open model, so the data will be transparent and public, so all the monies that come in on the bond will be transparent. It's a huge driver for progress on the Cure for HIV, which the market has failed to fund adequately." he said.
"When you talk about public health, it's about us, right. And when you talk about an issue which is an infectious disease, which is a terrible disease, and is very expensive both from a humanitarian point of view and an economic point of view – everybody should know what's going on." said Mr. Jensen
HEAL Alliance and the product which is the HEAL Bond aligns with financial and technology service providers. Jensen explained a blockchain model offers "programmable capital distribution tracking by consensus, so we know the monies are allocated to core mission for research and development which can be done in an organised way as a collectively managed social project."
"This is not an offer to invest today obviously, but some day it will be, assuming regulatory compliance. Our investors will someday have an opportunity to invest in HEAL Bond directly and when the investment capital comes in, it goes out to research and development institutions. When they make discoveries, those discoveries go into a collective IP commons. Then that IP, which is essentially the cure for HIV, becomes available to the members, in this case sovereigns, and then the IP licensing revenues come back and the investors get their money back at maturity with fixed income returns."
The first phase of testing, which was a three month period announced in Davos in January, included the UBS Innovation Lab at Level 39, a group which has taken a keen interest in so-called "smart bonds". The HEAL bond has also been looking at permissioned forks of Ethereum technology, which can essentially run "smart contract" computer programmes on a blockchain, as opposed to simply verifying transaction inputs and outputs, as is the case with Bitcoin.
Jensen said smart contracts are the perfect escrow agent; the terms of the deal are embedded within and automated by business logic, which runs as part of a distributed consensus system. In this case Series B and C of the HEAL Bond could be secured, like the Gavi bond was secured by sovereigns, noted Jensen. The contract can automatically match investors to guarantors; when the notional $10 is purchased by the investor it sits and waits for guarantor to back it for $10, and as soon as the backer comes in, the bond issues and the issue price funds get distributed to the mission, he said.
"The current model is a zero coupon bond that will yield a return that needs to be paid back from the IP commons licensing. But it's an impact investment, so a would-be impact investor, may enjoy both a competitive return and very high global impact in public health and welfare."
HEAL Alliance is the non-profit organisation which is managing the distribution of the capital, through a transparent system, to leading HIV Cure R&D institutions, for example UCLA, UC San Francisco, Johns Hopkins, Harvard, Oxford, Cambridge et al.
"In 2016, 1.2 million people will die from HIV/AIDS. Today, 3,200 people will die from HIV/AIDS. Everyone agrees that the HIV epidemic must be ended. For over thirty years, through the tireless and heroic efforts of our global community, the world has confronted and battled the worst pandemic in modern human history." At last, the end of the beginning has arrived.
"The true beginning of the end of HIV starts in 2016" said Mr. Jensen.