Investing in Biotech Isn’t Just for Investors Anymore
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any partnership in business. “Everybody has got to be in it for the long haul. That’s one of the most difficult things,” Mendlein says. “You want to build a relationship that’s sustainable, that weathers the ups and downs you are guaranteed to encounter in drug development.” He noted that Vertex’s Vicki Sato and Josh Boger, as well as the CF Foundation’s Beall, all deserve credit for keeping the program from going off the rails. “There was magic in that relationship, real trust and mutual respect. They created a very enduring program,” Mendlein says.
There are tricky ethical questions that have to be addressed whenever nonprofits and for-profits do business together, and I would hope that people are thinking long and hard about how to manage the potential conflicts. Disease foundations have a mission to advocate for the health and well-being of their member patients, not to make money. Government agencies have an obligation to look out for the overall health of their citizens and the economic growth of their territories. Pharmaceutical companies have a responsibility to make money for their shareholders, but also to put out safe and effective drugs that the medical community can depend on.
There’s a lot of mission overlap in all three of these groups, and some points where the missions are at odds. Government needs to keep bad drugs off the market. Disease foundations similarly have to stand up for their members if they have been wronged by a company that overzealously markets a drug for an unapproved use or tries to hide negative data about side effects. Can government and nonprofits do their jobs as effectively when they are invested in the drug companies?
This is thorny stuff, but I think the minefield can be navigated if people are thoughtful about it. The reality is that society benefits from developing new medicines that help people live longer, healthier lives. The Wall Street-driven investment marketplace in its current form fails in many ways—it’s why no pharma company has ever successfully developed a malaria vaccine. Governments and foundations have the money and long-term outlook that it takes to support much this kind of endeavor, whether it’s for developing vaccines for poor people in the developing world, or treatments for people with various rare diseases that investors won’t really support.
There are some bright and motivated people at foundations like the Multiple Myeloma Research Foundation, the Michael J. Fox Foundation for Parkinson’s Research, the CHDI Foundation, Accelerate Brain Cancer Cure, and the National MS Society, to name a few. Those groups can make a difference for patients by properly deploying their talented scientific advisory boards, and, yes, their money. The same goes for folks in government at the National Institutes of Health—which already supports a lot of early development work at companies—and at various state and local government agencies around the world.
My feeling is that a lot of smart people are coming around to this idea, that deals like the Vertex/CF Foundation collaboration are just the beginning of a broader financing network for biotech. It might just be the best hope to support drug development in the 21st century. And if it catches on, we’ll keep score on financing trends by doing a lot more than just looking at the NASDAQ or the quarterly VC financing stats. We’ll start to see more products win FDA approval, and get out in the marketplace to help patients.