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Philanthropy and Impact Investing

APRIL 18, 2017
Richard A. Basile

Philanthropy and Impact Investing: A new partnership needed to turn academic discovery research into treatments for rare disease patients

We now know the genetic mechanism underlying some 50% of the estimated 7000 rare diseases. New genetic sequencing techniques are, in one estimate, likely to uncover the mechanism underlying many of the remaining diseases by 2020.[1]

Therefore, we have hope that this rapidly growing body of knowledge, necessary to establish a starting point from which a treatment may be developed, can harness the resources that robust economic stimuli provided by the U.S. Orphan Drug Act and the European Orphan Medicinal Products Regulation and similar regulations across the world have encouraged.

According to the Pharmaceutical Manufacturers Association, more than 500 orphan drugs have been approved by the FDA in the US following the passage of regulatory incentives, with 133 products approved in the European Union. As of 2016, there are some 566 rare disease clinical trials underway, though it is unknown how many of these trials may become successful treatments.[2] 

While this should be good news for patients, we are sobered by the realization that as of 2017, this progress represents FDA approved treatments being realized for only about 5%, or about 400 rare diseases. The majority, including those diseases for which we have a known genetic mechanism identified, have no approved treatment at all. Consider that 30 million Americans and a similar number for the European Union, (with an estimate of >350 million globally) suffer from a rare disease, with more than half of those people being children.

We must ask why there is no treatment?
Despite scientific progress, major gaps in resources are delaying and blocking the advancement of rare disease discovery research. Most of the gaps exist between academic institutions and industry. Moving from disease knowledge to potential treatments is where the process often falters.

It is in this translational phase of development that a solution is needed.[3]

A Call to Action to Establish New Philanthropic and Impact Investment Partnerships

How can we achieve our goal?
We must look at the funding continuum necessary to advancing an increase in treatment candidates. As a nonprofit, philanthropy supports our critical mission objectives which include formation of international collaboration partnerships which bring the basic research and intellectual property (patents) to BioPontis Alliance, and patient engagement partnerships to educate patients’ organizations on the scientific requirements to produce a treatment. Philanthropic gifts also enable the integration of patients into the treatment development teams at BioPontis Alliance that will perform the initial experiments needed to demonstrate the research which can be transformed into a viable treatment meeting patient needs.  This pre-clinical development phase addresses the early risk that industry and venture capital will most often not take on.

However, development is expensive, often costing several million dollars to create just one disease treatment candidate that can proceed into even more costly clinical trials. Therefore, even with public government grants assisting, philanthropy alone will not be sufficient to fund the full development costs required to bring several parallel treatments into development, which is what is needed for the philanthropic mission of donors to be achieved.

In recent years, new ideas of making an investment with an expected investment return and the additional investment criteria to improve our world and the lives of people, is growing rapidly. This idea is referred to as Impact Investing. A common definition of Impact Investing is, “Impact investments are investments made into companies, organizations and funds with the intention to generate measurable social and environmental impact alongside a financial return.”[4]

Here is where for-profit investment that shares a complimentary objective of impacting a major societal need, i.e. to relieve the suffering of rare disease patients, can play a major role in forming a complementary philanthropic/impact investing partnership platform. This platform would enable us to dramatically increase the number of diseases for which treatments can be developed.
In the case of rare diseases treatment development, structuring a nonprofit and impact investment platform is the approach being taken by BioPontis Alliance. Of course, we must continue to confidently execute our nonprofit mission of bringing new treatments to patients, but in order to do so, we must also bring the business and contractual structure necessary to convince investors to participate.

To meet investor requirements, the business of drug development requires the nonprofit to operate a for-profit subsidiary to bring new treatments to patients. These requirements include:
  • Ensuring that drug development meets patients’ needs and regulatory requirements
  • Expert management of the drug development process
  • Intellectual property management (existing and new)
  • Managing the exit of successful projects to industry

A New Philanthropic and Impact Investment Collaboration is Born

The BioPontis Alliance for Rare Disease nonprofit parent, (consisting of a North Carolina-based 501 (c) 3 entity for the US and a Belgium based public utility foundation for Europe), is governed by a unified board which is responsible to ensure the nonprofit mission is being executed successfully. Board members of the nonprofit also serve as directors of a novel subsidiary company (BioPontis Alliance Rare Therapeutics, LLC) that will enable for-profit impact investors to participate in development projects alongside the nonprofit parent. It is through this subsidiary that drug development is funded and where licensing of intellectual property from university partners (patents) will take place. By offering investors an opportunity to invest in a portfolio of several treatment projects, BioPontis Alliance’s philanthropic support de-risks the investment, providing investor’s confidence in a return of capital. This return of capital may also include market rates of return on investment, sufficient to attract adequate capital to complete treatment development. Hence, the objectives of the philanthropic communities’ support benefits from resources being available from complimentary impact investment to ensure our patients’ mission impact is realized.

The Way Forward 
With one in ten suffering from a rare genetic disease, we all can win by successfully executing this new model. Patients, families, colleagues at work, friends - everyone is touched by patients suffering from these many rare diseases.

The patients win by participating in and benefitting from treatment development for their disease. The philanthropist wins by seeing their donated support achieve the mission milestones of impact on the many thousands of patients that currently have no hope. The impact investor wins by both achieving the impact on patients they mutually share with our philanthropy partners, and by realizing a reasonable rate of return on their investment. The academic researcher wins, by seeing their research converted into a treatment that helps patients.

With innovative approaches that bring the power of philanthropy and impact investment together into a singularly focused organization alongside patients and academic researchers, we indeed can win the fight against many rare diseases. A fight that affects 350 million people, mostly children, world-wide.

About BioPontis Alliance for Rare Diseases

BioPontis Alliance for Rare Diseases (http://biopontisalliance.org), a unique international nonprofit organization, was formed to address this specific problem and unleash science that holds the promise to bring more treatments into clinical trials for rare disease patients.

In so doing, we identified four critical success pillars necessary to achieve our mission which are:
  1. Scientific translation - Our mission is successfully met by the development of small molecule and biologic therapy candidates that meet regulatory review requirements to enter into human trials.
  2. Patient integration - become a hub for rare disease patients’ organization empowerment. We do this by a) integrating their voices into our preclinical therapy development programs and b) aiding patients’ organizations to focus their funded basic research programs most efficiently to create a strong foundation for therapy discovery.
  3. Structured collaborative partnerships - accelerate the path to new treatments by partnering more effectively with key expert groups. Alliance is in our name because we recognized that a major cause of the paucity of treatments is a lack of legally structured relationships that align the interests of and provide mutual benefits to each contributor to therapy development:  academic institutions and their researchers, patients’ organizations, funding sources and biopharmaceutical companies.
  4. Establish a funding continuum - Philanthropy is crucial to enable patients’ engagement and the earliest de-risking experiments on basic discovery science in collaboration with BioPontis Alliance university partners. We also anticipate, in harmony with our philanthropic and nonprofit goals and mission, the launch of an investment vehicle in 2017 to initiate for-profit investment in a portfolio of treatment projects that we are evaluating, to complement philanthropic funding. These seed investments will provide investors with an opportunity to impact invest, that is, to invest in potential treatments that will make societal impact by helping to ensure our donors support ultimately reaches the patient.
Richard A. Basile
Co-Founder
BioPontis Alliance for Rare Diseases
www.biopontisalliance.org

References

1. Boycott, et al, Rare Disease genetics in the era of new generation sequencing: discovery to translation. Nature Reviews: Genetics Volume 14, pp.681-691, Oct 2013 | doi:10.1038/nrg3555
3. translational phase: the scientific and technical development of basic biological disease research into treatment candidates that is necessary before a treatment can be tested in humans
4. Etzel, Michael, Philanthropies New Frontier-Impact Investing, The Bridgespan Group; Stanford Social Innovation Review 2015

 



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