Why nonprofits fund companies that do drug research
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Science has made paralyzed rats walk, cured mice of cancer and eliminated Alzheimer's in more lab rodents than you can count. Human patients? Not so much.
"There's frustration that developments from academic labs don't get picked up by (drug and biotech) companies," says Dayton Coles. As a board member of the Juvenile Diabetes Research Foundation, he has seen promising discovery after promising discovery emerge from the university labs that JDRF has funded, but none has turned into a cure for type-1 diabetes, which his daughter has.
Fed up with breakthroughs that fill journals rather than medicine chests, private foundations and charities that have traditionally funded academic scientists have started doing the once-unthinkable: writing checks for millions of dollars to for-profit companies.
It's a sign of desperation. One reason there have been so few drug breakthroughs lately is that the profit motive actually works against the development of new pharmaceuticals. Drug companies suffer from blockbuster-itis, the belief that only billion-dollar almost-sure things need apply for development. As a result, even the most brilliant discovery may not be translated into a drug unless it has 10-figure sales potential. Also, short time horizons on the part of venture capitalists, who generally want to see their biotech bets pay off in three years, don't mesh well with the lengthy drug-development process.
Enter the charities. Earlier this month, JDRF announced that it was giving $2 million to MacroGenics Inc., a Rockville, Md., biotech, for a phase-2/3 clinical trial of an antibody that might slow progression of type-1 diabetes. The antibody basically puts an immune-system cell called CD3 in a headlock, preventing it from orchestrating an immune attack on cells that produce insulin. Destruction of those cells causes type-1 diabetes.
MacroGenics acquired the rights to the antibody in 2005, after a major pharmaceutical company got it through safety tests with flying colors but then dropped it for financial reasons, says Scott Koenig, MacroGenics president and CEO. "Only" 1.7 million people in the U.S. have type-1 diabetes, so anti-CD3 therapy will never ring up Lipitor-like profits. Blockbuster-itis had struck again.
The macrogenics deal follows three others JDRF unveiled in 2006. In October, it announced that it would pay up to $3 million to Sangamo BioSciences Inc., Richmond, Calif., for a phase-2 trial of a protein drug that shows promise against diabetic neuropathy, in which nerve damage due to diabetes causes numbness, pain and, eventually, loss of motor function. It is also funding a phase-2 trial by Transition Therapeutics Inc., Toronto, of a drug that might make insulin-producing cells regenerate, and a phase-3 trial by TolerRx Inc., Cambridge, Mass., of an antibody that, like MacroGenics', might protect insulin-making cells.
Transition Therapeutics's big-pharma partner for its clinical trial bowed out in 2006, so the trial "would have come to a halt," says JDRF's Richard Insel, vice president for research. "We wanted to see this go forward, which meant moving beyond our traditional support for academic research."
In every case, the companies are also sinking their own (or investors') money into the trials. But they say the JDRF check makes a difference. "We were locked and loaded for our phase-2 trial, but the JDRF funding will let us look more closely" at how the drug works, says Sangamo CEO Edward Lamphier.
Parents of kids with diabetes aren't the only ones fed up with the slow pace of translational research. This week the Michael J. Fox Foundation announced that it had awarded Sangamo $950,000 to apply its gene-regulation research to slowing Parkinson's disease. In March, Families of Spinal Muscular Atrophy, founded by parents of children with this rare disease, ponied up $402,500 to help Paratek Pharmaceuticals, Inc., Boston, develop a drug for the disease.
"With 10,000 SMA patients in the U.S., the market is too small for companies to see this (disease) as a worthwhile bet unless we help them take a compound past the initial stages," says Kenneth Hobby, executive director of the charity. "If that means funding a company, we have no problem with that."
At the Myelin Repair Foundation, "we decided we have to break the mold to bridge the translational research gap, which is getting bigger and bigger," says the foundation's chief operating officer, Russell Bromley. That means paying companies to conduct validation research, in which scientists test how a compound works in the body. Given how few bright ideas turn into FDA-approved drugs -- fewer than one in 1,000, according to the pharmaceutical industry -- companies want compounds "de-risked" for them. Translation: get someone else to do, or pay for, this step.
Charities realize that writing checks to for-profits might not be what their donors had in mind. "We debated whether it was right for our money to go to a company that might make a profit," says JDRF board member Michael White. "We're not unconcerned about that. But we've invested so much in discovery, what we need now is to take these things to market. We're taking on the role of 'venture philanthropists.'"
First Published January 26, 2007 12:00 am