Fixes in Financing

High-risk, long-term investments are needed to turn medical innovations into lifesaving therapies. At FasterCures, we examine and highlight innovative funding mechanisms that are accelerating medical progress, including novel models that are effectively de-risking research investment through pre-competitive partnerships, diversification of assets, bridge funding, and government-backed ventures. Additionally, in collaboration with the Milken Institute, FasterCures hosts a variety of events on financial innovations, including a Financial Innovations for Translational Research Lab, held in July 2011. The lab was convened to address an industry-wide gap in funding for early-stage drug development-the so-called Valley of Death-and the corresponding report, Fixes in Financing, summarizes discussion of various research models and financing mechanisms that are currently emerging from practitioners in the field.

Novel R&D Funding Models

FasterCures continues to spotlight novel approaches to financing drug development with our monthly case study series—Fixes in Financing: Novel R&D Funding Models. The series will highlight and detail a different novel financing mechanism each month, helping to address the need of the biopharmaceutical industry for novel approaches to early-stage drug development.

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Cydan is a recently-launched orphan disease drug development accelerator based in Cambridge, Mass. It received its initial investment of $16 million from a syndication comprised of diversified venture capital group New Enterprise Associates (with support from general partner David Mott), corporate venture fund Pfizer Ventures, and Alexandria Real Estate Equities. Cydan aims to accelerate and de-risk promising rare disease programs with development and commercial potential to pepper the rare disease pipeline with promising new companies. While this certainly isn’t the first time that venture capital has invested in an accelerator (rather than a single-asset company or drug development platform), the diversity of investors in Cydan suggests a broader interest in ensuring a robust rare disease drug pipeline.

Previously Featured Models

Charley's Fund and the Nash Avery Foundation had an activist approach to medical research investment, yet there was still a limited ecosystem and no well-resourced biotechnology companies focusing specifically on Duchenne muscular dystrophy targets. Recognizing this need, the foundations created DART Therapeutics in 2010, which has since received $10 million in investments from its network of 15 foundations and other supporters.

ANTABIO is a biotechnology company that is focused on developing new treatments for hospital- and community-acquired infectious diseases that are caused by drug-resistant bacteria. In 2010, the company was facing difficulties raising a €300,000 seed round from traditional sources, so it decided to experiment with crowdfunding.

Established in 2000 as an independent nonprofit, Genome Canada (GC) works primarily with its six partner regional genome centers to implement a national strategy for the use of genomic research and technologies in health, agriculture, environment, forestry, energy, mining, and fisheries to maintain Canada's scientific leadership in genomics and foster economic growth. To support this mandate, the government of Canada has given $980 million in support of GC, which has been matched by partners and co-funders to bring the total investment to $2 billion over 12 years.

Translational Proof of Concept (TransPoC) is a precompetitive alliance being developed by H3 Biomedicine, an oncology drug discovery company, and an international group of collaborators to create shared cancer model platforms to advance the cumulative scientific understanding of the genetic drivers of cancer and targeted treatment options for patients. TransPoC is a start-up consortium that will offer its members shared large-scale translational research platforms to enable a personalized medicine approach to oncology drug discovery, create access to clinical proof-of-concept tools for new cancer therapies, and foster information sharing and open collaboration across a wide range of drug discovery oncology organizations in industry and academia.

The Cancer Vaccine Acceleration Fund is the financing arm of a comprehensive clinical research partnership between the Cancer Research Institute (CRI) and the Ludwig Institute for Cancer Research. Together, CRI and Ludwig work to identify, through a process of iterative clinical study, the most effective combinations of components and dosing for different types of cancer.

Incentives for Global Health—a nonprofit organization founded to develop the Health Impact Fund (HIF) proposal—is promoting the HIF as a mechanism to fund global health R&D through a compensation system based on actual health impacts of a drug in a region. The fund is proposed to be structured to incentivize pharmaceutical companies to develop innovative, effective medicines for global health conditions, i.e. diseases more commonly found in developing countries such as malaria, tuberculosis, and HIV/AIDS.

In 2011, Evotec came together with the lab of Douglas Melton, a professor at Harvard University and a researcher at the Howard Hughes Medical Institute, to form CureBeta, a collaboration to analyze and characterize targets and drug candidates focused on stimulating the regeneration of beta cells for the treatment of diabetes. The scientific focus of the initiative is to identify and develop new therapeutics that affect the physiological mechanisms that regulate beta cell regeneration with the ultimate goal of developing oral small molecule treatments that "trigger or support" beta cell replication

Cancer Research Technology and the European Investment Fund have joined together to create the Cancer Research Technology Pioneer Fund to bridge the "Valley of Death" by financing the development of cancer therapies from discovery through Phase I clinical trials. The participation of the European Investment Fund marks the entry of public investment funds into medical research finance in Europe.

Funded by the Thiel Foundation, Breakout Labs uses a revolving fund model to give small grants to newly formed companies to fund ground-breaking ideas. Breakout Labs is a nonprofit that merges the venture capital and traditional grant funding models to provide seed capital to truly innovative, game-changing research at start-ups that marry audacious ideas with commercial viability.

Financial Innovations for Translational Research

fixesfinanceThe biopharmaceutical industry needs novel approaches to early-stage drug development that better manage risk, lower capital cost and improve research effectiveness, create diverse portfolios, leverage risk-tolerant capital, and access new capital sources. With these issues in mind, the Milken Institute and FasterCureshosted a Financial Innovations Lab on July 19, 2011, in New York City. The Lab was convened to address an industry-wide gap in funding for early-stage drug development—the so-called Valley of Death. This report, Fixes in Financing: Financial Innovations for Translational Research, highlights various approaches for managing and financing translational research that were discussed during the Lab.