subsidizing Big Pharma
Wall Street Journal - January 26, 2007
SCIENCE JOURNAL By SHARON BEGLEY
Why Nonprofits Fund For-Profit Companies Doing Drug Research
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.’ “