American MedChem's (AMC’s) vision is colored by the teachings of two exemplary personalities in the pharmaceutical industry: (1) George W. Merck, III, who said: “We try never to forget that medicine is for the people. It is not for the profits.” (credit: Address to Medical College of Virginia, Richmond, Dec 1, 1950); (2) Dr. Jonas Salk, who steered clear of any commercial encumbrances for his creation of the polio vaccine, and, when asked: “Who owns the patent on the vaccine?”, he replied: “Well, the people, I would say. There is no patent. Could you patent the sun?” (credit: CBS Television Interview, April 12, 1955). These two leaders have expressed superior philanthropic ideals in the business of pharmaceuticals. It is in this spirit that AMC undertakes the responsibility of creating medicines for sick children afflicted with diseases which don’t present an attractive business opportunity for the extant commercial pharmaceutical industry.
Nearly 15-20 million children in the US alone (10x more in the whole world) have one of 7000 known rare diseases; for 95% of these diseases there is no effective, targeted medicine. This status quo must be changed. My personal conviction as founder of AMC, and commitment of the AMC board of directors, is to bring to bear the power of drug discovery R&D technology on these “orphan” diseases and expedite the creation of medicines for these sick children. The fact is that drugs are created through drug discovery R&D process. Hence, AMC “nonprofit biotech” is an innovative social enterprise, embracing a collaborative R&D model and philanthropic funding of research, to serve the unmet needs in medicine for children with rare diseases, childhood cancer, and neglected tropical diseases.
Sick children have no voice to advocate for their needs; their parents are vocal and desperate for effective treatments and cures for their sick kids; pediatricians who care for these children do the best they can, as if with one hand tied behind their backs. It is now the era of personalized medicines, and precision medicines. Genetics research is giving hope with accurate diagnosis of pediatric rare diseases. When there is a correct diagnosis there must also be safe and effective targeted medicine to treat the disease. Accurate diagnosis alone is useless for the sick child.
It is imperative to clarify that AMC presents neither a threat nor a competition for the extant commercial pharma/biotech rare diseases sector. AMC will not chase down “me-too” drugs for rare diseases just to carve out a market share. Our philanthropic goal is to serve sick children with diseases that are not attractive
to the market-driven commercial pharma/biotech sector. Thus, AMC presents a viable alternative model to the current industry rare disease R&D models. AMC model is uncomplicated: it engages academic research leaders in collaborations; conducts drug discovery R&D research at AMC using the well-established industry standard processes; invites pharma/biotech industry partners to licensing deals of value-added programs; shares risks and rewards; opens the opportunity for philanthropic participation at any level of funding and support for R&D; embraces knowledge sourcing. Thus, every stakeholder participates in this model to serve the most important stakeholder: sick children. AMC model is also scalable and financially sustainable, while promoting and encouraging basic research in pediatric rare diseases at universities and institutes—because AMC will be there to carry the ball toward #Meds4Kids.
Rare Disease Report: What is AMC and its mission?
Robert Selliah, Ph.D.:
American MedChem Nonprofit Corporation (AMC) is a philanthropic drug discovery R&D organization committed to serving the unmet needs in medicines for children afflicted with rare diseases, childhood cancer and neglected tropical diseases. AMC’s expertise and specialization are exclusively in small-molecule drug discovery R&D process. The organization can be accurately described as a social enterprise “nonprofit biotech”, with a convenient mnemonic “#Meds4Kids”. AMC is an independent public charity registered with the US IRS as a tax exempt 501-c-3 entity (the business is not associated with any university or hospital, hence independent). Financial support for research programs at AMC will be from philanthropic investments, crowdfunding, research grants, in-kind gifts, etc.
“To discover, develop and provide targeted medicines to treat rare and neglected diseases, particularly those of children.”
What is your R & D Model and how does it benefit 1) rare disease researchers 2) rare disease patients 3) investors?
AMC R&D Model:
AMC embraces a collaborative R&D model
to create safe/effective new medicines for children with rare diseases, childhood cancer and neglected tropical diseases. AMC’s collaborative partners are academic researchers who are the leaders in biology and genetics research of pediatric rare diseases.
Drug discovery R&D process is illustrated in diagram below (Fig. 1), outlining the essential research activities required to carry out a small-molecule drug discovery program, from biology discovery stage to final stage of medicine in a bottle. Just as in a 4x400 m relay race, each stage along this R&D process must be completed successfully to reach the finish line; in the case of AMC collaborations, the finish line is #Meds4Kids, safe & effective medicine for children.
Figure 1. Drug Discovery R&D process implemented by AMC for small-molecule drug creation. In this process, early stage drug discovery is carried out in collaboration with academic researchers, and late-stage pre-clinical and clinical stage programs are out-licensed.
AMC’s specialization and expertise are centered around the second stage of this process, as indicated in Fig. 1. The research activities enumerated in this stage are essential to translate the biology discoveries made in the first stage (Discovery Biology) to small-molecule drug candidate ready for testing in the clinical stage (Clinical Development). In its pivotal role, AMC takes on the following responsibilities: (1) Identify and engage prospective academic research collaborators (Business Development); (2) Carry out drug design, medicinal chemistry, IP creation at AMC (Discovery Chemistry); (3) Project management of preclinical development activities including IND-enabling studies (Preclinical Development); (4) Find and engage industry partners to out-license the value-added (“de-risked”) program, developed through the collaboration, for further development in the clinical stage and beyond (Clinical Development). Note: Projects for which there is no interest from industry partners, AMC and collaborator will identify academic clinical experts in the respective pediatric disease area to carry out Investigator Initiated Clinical Trials as the expedient path to evaluable the drug candidate in clinical setting and seek final FDA approval.
AMC Model Benefiting Rare Disease Researchers:
In most disease areas (common or rare) academic researchers are the leaders in fundamental biological research, and they discover pathways and targets that impact disease processes. This is not different in childhood rare diseases and pediatric cancer research. Typically, this basic research is publicly funded through research grants from national institutes and similar organizations.
A common bottleneck, however, for academic researchers is that they don’t have access to a clear-cut pathway for their important discoveries to be translated through a systematic drug discovery R&D process (see Fig. 1) to the critical clinical testing stage. This bottleneck is a harsher obstacle in pediatric rare disease research because there is a lack of commercial interest in such discoveries. (For discussion purposes, compare the intense activity and promotional efforts of technology commercialization offices within universities, hunting for risk-capital funding for a commercially valuable biological discovery with an aim to spin-out a startup biotech, or to out-license the technology.) This bottleneck forces these valuable biology discoveries in pediatric rare diseases to be archived (perhaps, a publication, a presentation, or a filed patent for the discovery may have been carried out). Hence, the benefit of the discovery doesn’t reach sick children who need the medicine. However important a biology discovery is, if it doesn’t reach the clinical testing phase, there is no chance that sick children will benefit from it.
AMC model is designed to eliminate this obstacle (ease the bottleneck and expedite the drug discovery R&D process), and help the academic researchers to “carry” their important discoveries to the clinical testing stage through a collaborative R&D process (shown in Fig. 1). AMC collaborative R&D model is, therefore, a definite “win” for the academic researchers, and encourages academic researchers to undertake basic research in pediatric rare diseases. Additional advantage is that joint research grants for the collaborative project with AMC brings additional financial resources to the Principal Investigators’ research groups. In the event of a licensing deal for the collaborative project, shared revenues built into the model bring a net gain for the university and the researcher—a project which might have never seen the light of day is monetized through collaborative research with AMC.
AMC Model Benefiting Sick Children:
AMC is not driven by profit motives; our mission is to create cures and treatments for sick children, because life, and good health, of children are very important to our human society. Therefore, we believe that AMC model, which embraces philanthropic funding and collaborative research, offers a viable and efficient path to bring forward much needed new safe/effective medicines for children with rare diseases, cancer and neglected tropical diseases.
AMC understands that there is a palpable gap in safe/effective medicines for children with these diseases, and knows that #Meds4Kids can be created through systematic and committed drug discovery R&D process. (Note: This is the process how all small-molecule medicines are created by the pharmaceutical industry.) As a social enterprise, AMC makes a serious and committed effort to eliminate the gaps in #Meds4Kids and effectively serve sick kids.
AMC Model Benefiting Philanthropic Investors:
At AMC, we firmly believe that medicine creation for children with rare diseases, pediatric cancer and neglected tropical diseases needs more philanthropic capital investments. In every human condition, when market systems can’t effectively serve humanity, it is often philanthropy that steps in to relieve dire needs—be it healthcare, hospitals, schools, research, medicine, natural disasters, etc. AMC model provides entrepreneurial philanthropic investors a great opportunity to support drug discovery R&D technology to create medicine, and change the status quo, for children with rare/neglected diseases.
In AMC’s philanthropic model, major charitable contributors are recognized as “sponsors” of projects—we associate their names with specific projects. Our crowdfunding efforts for each project opens the doors to the public who can support with small donation—all human beings care about the welfare of children in their communities and they wish to help in ways that they can afford.
AMC’s outputs, which are preclinical and clinical development candidates, have direct impact on the lives of children once approved as #Meds4Kids. Thus, all philanthropic support for projects at AMC would have the experience and satisfaction of helping sick children. Every flavor of funding and support for projects at AMC are “investments” in the health and well-being of sick children. Therefore, AMC collectively calls them “philanthropic investors” who enjoy a “Return on Involvement” (ROI)—the pride, satisfaction and publicity gained by helping save the lives of very sick children worldwide.
How is the R & D model different than more traditional models for rare disease research?
AMC R&D model is philanthropic and collaborative (see Fig. 2), with an exclusive focus on medicine needs for the most vulnerable members of our society—very sick children who might otherwise have no medicines. AMC model is also versatile, because we can collaborate on small-molecule drug discovery research for any disease, of any patient population size, so long as the disease fits within the umbrella of pediatric rare/neglected diseases. For these collaborative programs, AMC brings the power and sophistication of drug discovery R&D technology to bear on the creation of medicine for children with these diseases.
Figure 2. AMC business model engages academic researchers in collaboration, attracts philanthropic investments, and also invites industry partners to license value-added programs for clinical development. In this “nonprofit biotech” model, every stakeholder participates to change the status quo in #Meds4Kids.
Prima facie, AMC’s model is different compared to traditional commercial pharma/biotech R&D models existing in the industry for rare diseases. The most obvious difference is that AMC is not driven by profit motives. As a nonprofit social enterprise, AMC is driven by a strong sense of mission and spirit of innovation to solve the unmet needs in medicine for children with rare/neglected diseases. Furthermore, a blend of the following features, which AMC model incorporates, contribute to the comparative difference with traditional rare disease models: philanthropic effort; focus on rare/neglected diseases afflicting children; versatile, without any bias for a particular type of disease within the scope of childhood rare/neglected diseases; collaborative effort with academic researchers; out-licensing to industry partners for clinical development. Thus, AMC model presents a fresh and innovative “nonprofit biotech” model as an alternative approach to expedite the creation of pharmaceutical medicines for children.
Extant Pharma Industry Model:
It is fair to say that most rare disease models in the industry are based on the premise that a successful drug launched for rare diseases permits the company to exert premium pricing for that drug to generate profits for investors/shareholders. Genzyme is considered the pioneer in pediatric rare disease drugs, with the launch of Cerezyme® for Gaucher disease. The high price for that drug caused sticker-shock in the community; the product was profitable for Genzyme. Other companies follow this model.
Disease Fdn. Venture Philanthropy Model:
The small-molecule drug Kalydeco® for cystic fibrosis was launched by Vertex Pharmaceuticals for pediatric use. It is also a very costly drug, and a profitable product launch for Vertex. However, Kalydeco® drug discovery R&D efforts would not have begun if not for the visionary venture philanthropic act by the Cystic Fibrosis Foundation. Because of the commitment of $100 million as investment by CFF in Aurora BioSciences (later acquired by Vertex), the start-up biotech committed R&D resources and undertook the drug discovery program. Not all disease foundations have such deep pockets or fundraising savvy as CFF.
There are minor efforts from various disease specific foundations to sponsor research in drug discovery for respective diseases afflicting children. These research efforts are centered at academic laboratories, and are predominantly directed to biology discovery. AMC will seek out these researchers to establish collaborations. There are only a few (can be counted on the fingers of one hand) disease foundations which are carrying out any drug discovery R&D for specific pediatric rare disease.
Orphan Drug Act and Pediatric Priority Review Voucher
(PRV) are efforts by the US Government to incentivize the industry to create medicine for children with rare diseases. Since 2014, 9 PRV’s have been issued (mostly biologics) to drug sponsors, but the debate continues if these drugs would not have been launched by the companies if Pediatric PRV incentive didn’t exist.
Reliable Models are Necessary:
Increasingly higher price for drugs for rare diseases is not a sustainable model. Recently a nonprofit organization called Patients for Affordable Drugs was founded to address the issue of high drug prices. When we consider the case of a disease afflicting 100’s of children, how high must the drug be priced for profits to be realized? Therefore, it is not wrong to assume that adequate and systematic R&D resource commitment for small-molecule drug discovery at pharma/biotech industry are rarely available to serve small populations of pediatric patients. The reality being, these projects don’t present a profitable business opportunity for the industry. Furthermore, government incentives can disappear, or be modified, by an act of US Congress.
AMC is unencumbered by factors such as shareholder ROI, profitability, or government incentives. This allows AMC to concentrate on its mission to bring forward medicines for children with rare/neglected diseases.
Can you provide examples to illustrate how a drug can be developed using the model?
For ease of discussion, we can think of small-molecule drug discovery and development process as being similar to a 4x400 m relay race—each stage must be completed in order to reach the finish line. Please see Fig 1 in which the colored boxes indicate specific research activities required for the respective stage of the process. In this depiction, drug discovery process moves along the path from left to right; the value of the program also increases in the same direction, and in later stages the program might become more attractive to industry partners. The finish line in this race is drug in a bottle (#Meds4Kids). Just like a relay race, drug discovery and development R&D is truly a collaborative process. Even in large pharma companies, chemists, biologists, toxicologists, pharmacologists, pharmaceutical scientists, process chemists, formulations scientists, clinicians, manufacturing groups, and other technical specialists, collaborate to deliver a drug in a bottle.
Drug Discovery & Development Using AMC Model:
Within AMC’s collaborative model, the academic researcher carries out research activities in “Discovery Biology” (teal color box in Fig 1), while AMC scientists take responsibility to conduct research activities included in “Discovery Chemistry” (red color box in Fig 1), and project manage all activities, including IND enabling studies, shows as “Preclinical Development” (green color box in Fig 1). The outputs at the end of these three stages could be either a preclinical development candidate or a clinical development candidate (generally called Development Candidate). Either of these two outputs may be suitable for out-licensing to pharma/biotech partner to carry the program further through the “Clinical Development” and “Drug Manufacture & Distribution” stages (blue color boxes in Fig 1). In cases where there is no licensing interest from a pharma/biotech partner, AMC collaboration will hand over the clinical ready drug candidate to academic clinical experts in the disease area, or to a national institute interested in drug development for children to carry out Investigator Initiated Clinical Trials and seek FDA approval.
Detail Description for a Hypothetical Example:
From the point of view of an example, suppose, an academic research group in pediatric rare disease discovers a unique biological pathway which impacts the disease progression. The same research team would typically validate this target pathway and determine if that target is amenable to interventions by small molecule drugs. If the answer is yes, then the academic research group could develop a robust screening assay and carry out a compound screening study (NIH facilitates compound screening for important targets) to identify prototype compounds which are called” hit/lead molecules”. (This is the Stage 1 indicated as “Discovery Biology” teal color box in Fig 1.)
Let’s assume that this project, at the stage of Discovery Biology, doesn’t attract any risk capital to start a new biotech, or out-license to industry partner, for that technology to be developed toward clinical candidate stage. Perhaps there are no market-based drivers (i.e., no anticipated profitability, hence, not attractive to VC’s), which means the project may be archived—dead on the vine! This is where a strategic collaboration with AMC would be most meaningful. Collaborating with AMC resurrects this program!
The hit/lead molecules identified by the academic researcher during compound screening would be the starting point for AMC collaboration (that is Stage 2 of the program indicated as “Discovery Chemistry”, red box in Fig 1). AMC scientists apply all the state-of-the-art tools in medicinal chemistry, drug design, computational chemistry, synthetic chemistry to create sets of compounds based on the hit/lead. These compound sets will be tested in the assays at the academic collaborator for activity. This is always an iterative process, until an optimum compound with best biophysical, biological, toxicological and biochemical activity is identified. This is also the stage at which valuable IP is created for the program. All discoveries made in the program are co-owned by AMC and collaborator. Data sharing and transparent collaboration are key factors for success in this stage.
The optimized compounds are then put through various preclinical studies, also called IND enabling studies, (Stage 3, green box in Fig 1) to qualify a clinical development candidate. AMC project coordinator will project manage the preclinical studies, as these activities are highly specialized, and occur at various contract research laboratories.
During the preclinical studies stage (Stage 3, green box in Fig.1), AMC and academic collaborator (usually the corresponding university’s office of technology commercialization) will identify prospective industry partners who might be interested in licensing the program for further development. If a committed partner is identified, out-licensing negotiations will take place, and the deal will arrive at some agreed level of revenue for the program. Such revenue will be shared by AMC and academic collaborator (university). The collaborative effort would be complete at this stage. The industry partner takes ownership and responsibility for “Clinical Development” and “Manufacturing & Distribution” (final stage, blue color boxes in Fig. 1) activities and seeks FDA approval to launch the drug. The industry partner may be entitled to earn a valuable FDA priority review voucher (see Fig. 2).
In case there is no interest in the program from an industry partner for a licensing deal, then the clinical-ready compound and supporting information will be transferred to academic clinical experts, or disease foundation, interested in completing the clinical studies and getting FDA approval for the drug. Drug manufacturing will be handed over to a FDA approved clinical manufacturing contractor. In this scenario, there is no anticipated revenue, as there was no licensing deal with industry partner. The work of the collaboration is complete at this stage.
Undoubtedly, the ramifications of such a collaboration are manifold: (1) the advancement of the project opens the prospects of treatment for a childhood rare disease; (2) opportunity for increased research resources for the academic researcher’s lab operations through joint grants; (3) as IP and discoveries are co-owned, the event of an out-licensing could result in valuable shared revenue for collaborator and AMC; (4) the academic researcher will enjoy the prestige and honor of seeing their basic biology discovery reach the clinical validation stage; (5) if a pharma/biotech partners with the collaboration to carry out the late stage clinical development for this project, they would have the chance of putting their name on the project, and win valuable kudos from the FDA voucher programs for a successful drug launch; (6) philanthropic investors get notable recognition of having sponsored the program (through donations and research grant support)—ROI in this case is Return on Involvement; (7) AMC has the great satisfaction of having served sick kids, the academic researcher, having provided the opportunity for philanthropic participation, and if there is shared revenue from licensing, the portion of revenue AMC receives would be reinvested into additional drug discovery collaborative projects. (AMC’s march toward self-funded nonprofit status is a stated long-term financial objective.)
Explain what 'no market based drivers' means for investors?
For discussion sake, let’s examine the corollary: If pediatric rare diseases had reliable market-based drivers, the pharma industry and biotech startup would naturally invest in these disease programs and conduct research to deliver innovative drugs for children. There would be no need for government incentives.
But as we know, this sort of engagement by pharma/biotech industry is not happening. Why? Because, these pediatric rare diseases, with small patient populations, do not represent a reliable way to make a profit (market driver). As a consequence, sick children suffer without proper medicine.
Pharmaceutical industry is able to serve patients with common diseases, with sophisticated new medicines, because these diseases have reliable market drivers; they present desired opportunities for profitable business, while competition drives innovation of safe/effective drugs. “Me-too” drugs thrive in this business environment, because the market is huge and marketing savvy of a pharma company can effectively carve out significant market share. So, it is obvious that profitability is the fundamental incentive for the pharma/biotech company to undertake drug discovery R&D research and launch new drugs.
All publicly traded pharma/biotech companies are answerable to their shareholders, and profitability of the company’s drug products is the obvious market-driver which attracts investors. Market-based drivers (read: profitability) is also what give the vibrancy and dynamism to the traditional biotech/pharma industry sector. Many drug discovery R&D programs inside pharma companies are terminated, before they reach the clinical stage (or the marketplace), because a market analysis might have shown insufficient profitability. These are common business decisions within pharma industry. What is the margin of profitability that a company expects? That is subjective, varying from one company to the next.
When we examine the traditional start-up biotech sector, the management of the company must present a compelling and viable business proposition to its prospective early-stage investors (VC’s, Angels, PE’s, etc.) to satisfy their expectations of financial gain (ROI). Suppose, a start-up biotech wishes to pitch a business proposal to investors; the premise is that the company plans to invest in drug discovery R&D to create medicines for a disease that impacts 100’s of children. This proposal would be a non-starter! The prospective investors would simple discard the proposal. There is no chance for that drug product (if discovered for this pediatric disease) to be sold at ridiculously high price to generate ROI. For this scenario, therefore, we can confidently say that there is no market-based driver and hence no risk capital investors will flock to invest in such a biotech startup.
AMC philanthropic model is a viable approach to attract philanthropic investors to support projects which don’t have the necessary market drivers to attract the traditional pharma/biotech industry and investors. It is not unusual that where market systems fail, it is often philanthropy which steps in to serve dire human needs. AMC serves sick kids who might otherwise have no medicine.