Max Wallace, CEO of Accelerate Brain Cancer Cure, uses a football analogy when explaining his foundation’s approach to funding life sciences research.
Large companies aren’t getting into the game, which they see as too risky. But the stakes are high because patients are dying. Accelerate Brain Cancer Cure steps in to try and help researchers get into the end zone. Quickly. Accelerate Brain Cancer Cure is not interested in incremental developments that move the ball down the field a few yards at a time. It’s looking for medical breakthroughs.
“Our job is to put the ball in the air, throw the long ball,” he said.
Angel investors and venture capitalists are not the only path for companies looking to traverse the so-called valley of death. Life sciences companies have a funding alternative in foundations formed around specific diseases. North Carolina entrepreneurial group CED held a biotech forum on foundation funding on Wednesday in Research Triangle Park. Besides Wallace, other panelists were Bob Beall, president and CEO of the Cystic Fibrosis Foundation; Tracey Mumford, associate director at the Michael J. Fox Foundation for Parkinson’s Research; and Josh Sommer, executive director of The Chordoma Foundation.
For companies, the benefits of foundation funding go beyond getting the needed cash. Foundation funding is typically nondilutive to a company’s shareholders, said Peter Ginsberg, vice president of business and technology development at the North Carolina Biotechnology Center. Foundations can bring to companies their expertise in a particular therapeutic area. They can also help with clinical trial recruitment — one of the biggest hurdles for testing investigational drugs for rare diseases. The CF Foundation, for example, maintains a clinical trial network of 80 care centers across the country.
Panelists offered some tips for companies looking to work with foundations.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Innovation … and urgency. Accelerate Brain Cancer Cure vets projects through a straightforward process that asks applicants for three things: a one-sentence description of their project; an explanation of its impact; and the reason that project needs to be funded now — why it’s urgent. Foundations are typically looking for potential treatments that bring something new to the field, rather than offering another version of an existing treatment. “We don’t need a third me-too drug, we’re interested in innovation,” Wallace said.
Understand what foundations can do. Sommer noted that chordoma is one of hundreds of rare cancers, which can make it difficult for researchers studying any particular one cancer to attract funding. But Sommer said that the Chordoma Foundation will often try to maximize the impact of its dollars by finding projects that have applications to more than one cancer. The foundation’s scientific advisory board takes an active role in seeking out potential projects that would be a good fit. Accelerate Brain Cancer Cure’s average grant size is $175,000 for one year, nonrenewable. Wallace calls its grants “enabling money” that helps a company get to larger grant or perhaps venture capital investment. The CF Foundation has structured deals of $12 million or more and to date, has invested about $75 million in Massachusetts biotechnology company Vertex Pharmaceuticals, which has taken through clinical trials a new drug that targets the defective protein that causes cystic fibrosis. But that money came with stipulations that the foundation be involved in the work. “It’s not just money,” Beall said. “It’s access to talent, people, patients. You’ve got to be at the table.”
Follow directions. It sounds simple, but many companies seeking money don’t read the request for applications in their entirety, Mumford said. Applicants need to understand what kinds of projects a foundation will fund. Mumford said the Michael J. Fox Foundation will fund research from preclinical stages all the way up to phase 2b trials. But that research must be moving in a direction of eventually bringing a new treatment to patients. “We’re open to funding almost anything, but it’s got to have applicability to a therapeutic down the road,” Mumford said. Early dialogue is important, Beall said. Of some 30 deals that the CF Foundation has made with companies, Beall estimates the foundation has talked to five times that number of applicants. Beall said that if the foundation does not have an answer to a question, it often knows someone in the scientific community who does. Beall cautioned that companies should expect to hear “no.” “But it’s better to hear ‘no’ early in the process,” he said. Early dialogue with the foundation saves a company time and can ultimately help a company get to where it needs to go.
Be ready to deal. Beall said that no two deals are the same, but all of the CF Foundation awards are structured as business deals. For its Vertex investment, the foundation will receive royalties from future drug sales. Foundations will ask for something in return, whether it’s a royalty, a piece of the intellectual property, or at the very least, payback of the grant. Expect deals to be structured with milestones. And Beall adds that if milestones aren’t met, the foundation will walk away. Wallace said he will typically try to get payback of the grant or some money off of future sales. That money will be recycled for future grants. Wallace said he structures deals so risks are shared. “I want to see that you have skin in the game,” he said.
