Venture Philanthropy

A new business model called ‘Venture Philanthropy’, is a real symbiotic partnership between not-for-profits and for-profits, which can provide funds for small pharmaceutical companies - especially useful for rare disorders or orphan drugs and early Biopharmaceutical companies. The not-for profits help fund pre-clinical research and clinical trials, that would other wise languish through lack of resources. Many of the organization are ‘start ups’ that are still at the ‘proof of concept’ stage, when Venture Capitalists are too shy to invest – maybe not understanding the full knock on market potential etc. Not all are small, even in big corporation useful drugs with limited returns, do not always get the resources to see them through the long clinical process. Legal contracts ensure payments are tied to results and the not-for-profit may often take a monitory return when the drugs get to market, allowing them to plough back the funds into future developments.

The Multiple Myeloma Research Foundation (MMRF) is spearheading this exciting new funding initiative; they provide grants, some in the order of $1m, to pharma companies anywhere in the world, to do research and clinical trials in the field of Multiple Myeloma (MM). Myeloma is a rare blood Cancer, with only an estimated 110,000 diagnosed worldwide, with maybe only 2,500 in Australia. Alan Liddle, CEO of Immune System Therapeutics Ltd, an Australian company, specialising in the development of monoclonal antibody therapies for multiple myeloma and other blood cancers indicated that the MMRF was as excellent resource.

The MMFR has supported over 215 such research grants, spending $75m, and currently funding more than 30 compounds! They report a major contribution to the four drugs that are through the clinical process, approved by the FDA and now on the market for MM. It is impressive that a relatively small organization could be involved in such a large number of compounds.

Some of the companies who have received funds from the MMRF presented at their recent Investor Summit and included, Sunesis, Semafore, Proteolix, Novartis & Keryx. The MMRF can also muster about 1/2 of all MM patients in the USA (~50,000 with 19,000 new cases in 2006, losing ~11,000/yr). They claim a database of 30,000 research subjects, ready and willing to participate in clinical trials. A sister organization the MMRC, is a consortium of 13 expert investigators and experienced clinical research sites, which can also advise on protocols, and accompany visits to the FDA. They also have their own tissue bank, of almost 1,000 bone marrow samples.

At Advanced Bionics UK, we pioneered a similar, but a precursor, relationship, with a number of deaf children’s charities/not-for-profits. With The Ear Foundation, The Link Center and the NDCS, we outsourced many of our training, seminar (including housing) and some research needs. They in turn provided us with subjects for our clinical trials and marketing initiatives, and access to clinical trial investigators and luminaries etc. They also encouraged new product initiatives, product extensions and accessories. We counted them as part of our distribution channel, which ultimately helped with our sales figures.

According to CenterWatch there are only a few (5 in total) organizations that can offer this type of funding and services – Cystic Fibrosis Foundation, Muscular Dystrophy Association, Juvenile Diabetes Research Foundation, Michael J. Fox Foundation for Parkinson’s Research, along with the MMRF but together they plan to fund over $75m worth of research in 2007. However, there is the potential for any patient driven group to exercise this concept, and nearly all disciplines have such not-for-profit organizations.