Doing Good To Feel Better: The Expanding Role Of Philanthropy In Drug Development

Posted May 9th, 2017 by Ros Deegan, in From The Trenches, New business models, Patients

This blog was written by Ros Deegan, CBO of Bicycle Therapeutics, as part of the From The Trenches feature of LifeSciVC.

As a child, I once played the fiddler in ‘Fiddler on the Roof’. I was a horrible violinist with a poor head for heights. But the role did leave me with the words for ‘If I were a rich man’ engraved on my brain. Nowhere do I think this song title is more relevant than in the interplay between philanthropy and the pharma/biotech sector, where rich men and women – together with several established foundations – are sowing the seeds of change.

A 2012 analysis by the National Bureau of Economic Research estimated that annual donations for scientific philanthropy from individuals and private foundations exceed $4B. While this figure may pale in comparison with the >$50B spent on R&D by members of Pharmaceutical Research and Manufacturers of America (PhRMA) or even the >$30B (and falling) federal grant budget, as a private biotech executive I could get a lot done with $4B.

In my view, charities and foundations are successful in patient assistance and education but have struggled, historically, to make a meaningful difference to therapy. There are, of course, exceptions. Typically, less than 20% of health-based donations is invested in research versus other initiatives, despite broad use of evocative terms like ‘cure’ in messaging. And this small percentage is mostly distributed in the form of grants for early science. Such grants often lack direct therapeutic application and sufficient oversight to manage the inherent limitations of today’s academic system to motivate drug development. When I spoke to an academic researcher from Stanford working in the same disease area for which her son is a patient, she told me that her national disease foundation had “…zero chance of making a difference in the treatment of the disease.” Not a quote to inspire your next charitable fun run.

The situation in 2017 is improving, thanks in part to different funding models and because of the entry of influential billionaires from the technology sector.

Different Funding Models

One of the most interesting models for integrating a philanthropic charter into a commercial organization is also the oldest. The Novo Nordisk Foundation – an organization with a controlling interest in Novo Nordisk – is a merger of two foundations. One of these predecessors was established in the 1920s. Its primary focus was the scientific and societal responsibility associated with producing insulin, a lifesaving medicine. The integration of a social charter into the formation of a pharmaceutical company is not unique to Novo Nordisk: the Wellcome Trust was created in 1936 by Sir Henry Wellcome with the share capital of the Wellcome pharmaceutical business as its main asset. Sir Henry’s intent was to use the profits of the business to advance medical research. The Trust’s charitable giving grew from a total of £1.2 million in its first 20 years to £650m in 2007, following the sale of its interest in the Wellcome business.

Despite this early alignment between philanthropy and the emergent pharmaceutical industry, non-profit medical research and commercial research operated largely independent of each other in the second half of the 20th Century. Pharma grew distant from George W. Merck’s famous words that ‘medicine is for the people’ and thereby ‘the profits follow,’ such that foundations became increasingly skeptical of Pharma’s motivations and the loser was the patient. Since the 1990s, a handful of organizations have, however, led the way in reestablishing strong collaboration between foundations and the industry. These pioneers include L’Association française contre les myopathies (AFM), the Cystic Fibrosis Foundation and Cancer Research UK.


AFM, France’s largest patient organization funding muscular dystrophy research, spun off a non-profit biotech called Généthon in 1990, with the mandate of developing therapies for rare diseases with methodologies that could be generically applied to other disorders. Généthon receives over 80% of its funding (approximately 20M Euros/year) from AFM’s successful annual telethon. Given its rare disease focus, Généthon has had to build its tools and technologies from scratch. With its platform now in place, Généthon has accelerated its clinical activities over the last few years.

Cystic Fibrosis Foundation

The Cystic Fibrosis Foundation was formed in 1955. By the late 1990s, the predicted median survival for patients had more than doubled but Robert J. Beall, Ph.D., then President and CEO, knew the next step-change required the participation of the industry. He began working the phones to persuade a for-profit company to accept a significant funding commitment from the charity to work on a treatment for cystic fibrosis. Two drug companies returned his calls and in 2000 the Cystic Fibrosis Foundation made its first large investment: $40 million with Aurora Biosciences (now Vertex Pharmaceuticals).

12 years later, the first drug to address the underlying cause of cystic fibrosis, Kalydeco, received FDA approval. In 2015, the Cystic Fibrosis Foundation sold its royalty rights to Royalty Pharma for >$3B. This money is now being reinvested in universities, biotech companies and large pharmaceutical companies to drive additional research into cystic fibrosis. It disappoints me that the Cystic Fibrosis Foundation has received negative as well as positive coverage for its actions. Having shared a drink with a Kalydeco Phase 3 trial subject who had previously been given six months to live, I am astonished that anyone would prioritize not making money above an individual overcoming their disease.

The reason for my conversation with this patient? He had overheard a chat about a non-profit that I was attempting to set-up that would have leveraged the cystic fibrosis model more broadly using crowdfunding as a vehicle for donations. My non-profit’s downfall was the U.S. tax code, which allows foundations to use their tax-advantaged charitable allocations to make investments but only as a fraction of a foundation’s total wealth: a purely investment based model doesn’t fly.

Although my proposal failed, large foundations are increasingly allocating some of their donations to the venture philanthropy model. Notable participants include the Alzheimer’s Drug Discovery Foundation, Autism Speaks, JDRF, the Leukemia & Lymphoma Society, the Michael J. Fox Foundation, the Multiple Myeloma Research Foundation and the National Multiple Sclerosis Society.

Cancer Research UK

Cancer Research UK (CRUK) is the leading cancer charity in the world. It is funded entirely by public donations. Approximately 32% of research expenditure supports early research to better understand the mechanisms of cancer development. The charity is also very active in the discovery and development of new cancer drugs: its technology development and commercialization company, Cancer Research Technology (CRT), has been involved in the establishment of more than 30 companies in cancer drug discovery and its Centre for Drug Development has taken more than 140 agents into early clinical development. Among their numerous alliances with industry to advance promising science towards patient benefit, CRUK and CRT announced in September 2014 an innovative collaboration with MedImmune (AstraZeneca’s global biologics R&D arm) to jointly establish a state-of-the-art CRUK-MEDI Alliance Laboratory, which was launched the following year in Cambridge UK to focus on discovering and developing novel antibodies for the diagnosis and treatment of cancer.

In 2007, CRUK and CRT jointly launched their Clinical Development Partnerships initiative. Under this initiative, CRUK funds the preclinical and/or early clinical development of selected projects from industry partners to which CRUK can add value. I had the pleasure of working with the Clinical Development Partnerships team last year when they selected BT1718, Bicycle Therapeutics’ lead asset, for funding. Bicycle is a small company with a big platform: this partnership provides funding flexibility to allow our scientists to move three programs into the clinic by 2019, in addition to building the most robust dataset for BT1718 that will include extensive biomarker work. We have also gained access to CRUK’s significant clinical operations infrastructure and strong investigator relationships.

Tech billionaires

The pre-eminent tech billionaire who has had the greatest impact on healthcare and biotech is Bill Gates. He has partnered early and often with biotech companies, seeking breakthrough technologies to change the course of diseases affecting vulnerable populations. Money from the Bill & Melinda Gates Foundation has been a key source of funding for many of the next generation infectious disease companies. On a personal level, Gates has invested in disruptive technologies such as Nimbus’ computer-aided drug discovery platform and Foundation Medicine’s cancer screening diagnostic.

The last five years have seen an increasing number of tech billionaire philanthropists innovating in the healthcare space. In 2012, The Thiel Foundation – created by PayPal co-founder and early Facebook investor, Peter Thiel – started Breakout Labs to fund scientist entrepreneurs looking to make the transition from early start-up to venture-backed company. As of April 13, 2017, 34 companies had been funded.

The Facebook theme continues with Sean Parker, Facebook’s first president and the co-founder of Napster. In 2016, he started the Parker Institute for Cancer Immunotherapy to ‘hack’ cancer. Parker is personally involved with the organization, having embedded himself in both the science of immunology and the challenges of the existing funding environment in academia. Last month, his institute announced its first industry collaboration: it will work with Bristol-Myers Squibb and another charity, the Cancer Research Institute (CRI), to coordinate clinical immuno-oncology studies across their networks.

Filling out the Facebook theme, the Chan Zuckerberg Initiative was announced in late 2016 with a three year, $3B commitment, including $600m set aside for a) a detailed census of all the cell types in the body and how they interact, and b) an infectious disease initiative. It is too early to appreciate the specifics of the Chan Zuckerberg Initiative. But I did note the recent acquisition of a tech start-up called Meta, which aims to provide free access to an artificial intelligence search engine that will help researchers and doctors find the most relevant information in a database of science research papers.

The acquisition of Meta showcases one of the major goals of these tech billionaire initiatives: efficiency in the pre-competitive space. The Parker Institute is perhaps the biggest investor in efficiency, given that the research areas in which the institute is operating – immuno-oncology and CRISPR – are not short of funds in the commercial-based sector. Sean Parker’s focus appears to be optimizing academic input through collaboration and shared technologies with a focus on drugs versus publications. He is also looking to incentivize grand ideas that would not get funded under the regular grant mechanism.

The efficiency focus contrasts with the driving force behind the Bill & Melinda Gates Foundation, which is to provide funding in areas neglected by market economics. Which begs the question: if you were a rich man – or woman – looking to ‘cure all disease’ (as posited by Chan and Zuckerberg), where would you spend your money?

I would repurpose existing drugs. It may be more newsworthy to uncover new medicines and unleash disruptive science. But our industry is sitting on a pipeline of potential new products that could make a dramatic difference to the lives of patients, and quickly. These repurposed drugs would come with broad safety databases and robust literature to support different disease indications. Initiatives are underway to tap into this potential, for example the New Therapeutic Uses program, launched in 2012 by the National Center for Advancing Translational Sciences but these initiatives tend to be small and low profile compared to the tech billionaire programs described above. Raising the profile and the funding for such efforts might help overcome one of the biggest barriers to success which is persuading pharmaceutical companies to provide the compounds.

As an example of what might be achieved, metformin, one of the most widely prescribed anti-diabetic medications, could have a role in treating cancer. Its most common side-effect, mild gastrointestinal symptoms, is almost a pleasure compared to the side-effects associated with many of today’s cancer medicines. And the fact that metformin is already available at less than $1 per pill? This would provide access for patients in both developed and developing countries, albeit without any profit. But, that wouldn’t matter. If I were a rich man.


Thanks to Claudine Bruck, Kevin Lee, Michael Skynner, and Ola Zaid for reading drafts of this post.





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