Introduction1

The purpose of the workshop was to convene representatives from a variety of voluntary health organizations with experience in establishing and developing translational research programs supported by venture philanthropy strategies. Participants provided valuable insight into a wide range of considerations for other voluntary health organizations who are seeking to start or develop their translational research programs. Discussions centered on best practices and lessons learned in order to improve efficiency and effectiveness in translational research.

Voluntary health organizations—that is, nonprofit charitable organizations, patient advocacy groups, and foundations—have a long-standing history of providing support to those suffering from disease. Historically, this giving fell under a few key areas: buying and distributing medicine; providing food, care, and shelter to those in need; offering education; and delivering prophylactic equipment to target areas, such as mosquito nets in malaria-stricken regions. In addition, many voluntary health organizations have supported basic research, helping to seed the development of innovative treatment ideas that commercial pharmaceutical and biotech companies can advance into the clinic and develop into novel therapies. Recently, some voluntary health organizations began to shift from providing care, educational resources, and funding research grants to now

1

The planning committee’s role was limited to planning the workshop, and the workshop summary has been prepared by the workshop rapporteurs as a factual summary of what occurred at the workshop.



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Introduction1 The purpose of the workshop was to convene representatives from a variety of voluntary health organizations with experience in establishing and developing translational research programs supported by venture philanthropy strategies. Participants pro- vided valuable insight into a wide range of considerations for other voluntary health organizations who are seeking to start or develop their translational research programs. Discussions cen- tered on best practices and lessons learned in order to improve efficiency and effectiveness in translational research. Voluntary health organizations—that is, nonprofit charitable organi- zations, patient advocacy groups, and foundations—have a long-standing history of providing support to those suffering from disease. Historically, this giving fell under a few key areas: buying and distributing medicine; providing food, care, and shelter to those in need; offering education; and delivering prophylactic equipment to target areas, such as mosquito nets in malaria-stricken regions. In addition, many voluntary health organiza- tions have supported basic research, helping to seed the development of innovative treatment ideas that commercial pharmaceutical and biotech companies can advance into the clinic and develop into novel therapies. Recently, some voluntary health organizations began to shift from pro- viding care, educational resources, and funding research grants to now 1 The planning committee’s role was limited to planning the workshop, and the work- shop summary has been prepared by the workshop rapporteurs as a factual summary of what occurred at the workshop. 1

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2 VENTURE PHILANTHROPY STRATEGIES supporting the earliest stages of drug development and engaging in trans- lational research. On October 3, 2008, a wide range of participants, from voluntary health organizations to academic investigators to industry representa- tives, gathered at the Arnold and Mabel Beckman Center of the National Academies of Sciences and Engineering in Irvine, California, for a work- shop titled “Venture Philanthropy Strategies Used by Patient Organiza- tions to Support Translational Research” (the workshop). Participants were selected from a variety of backgrounds and were asked to discuss and share their own experiences and lessons learned as their organiza- tions moved into a translational research program supported through ven- ture philanthropy strategies. Workshop chair Timothy Coetzee, executive director of Fast For- ward of the National Multiple Sclerosis Society, noted that embracing venture philanthropy does not mean turning away from original and basic science research. In explaining why the dynamics are shifting, he reiter- ated that while supporting scientific discovery is still important, it is also important to develop new funding models that bring products into the clinic. Workshop participants focused on the how and why of developing such new funding models to bring products and, most important, hope to patients. VENTURE PHILANTHROPY An increasing number of voluntary health organizations are looking at venture philanthropy as a critical way to advance their mission of help- ing patients and working to cure disease. The concept of “venture philan- thropy” stems from venture capitalism, which invests money from various third-party sources in typically high-risk areas. For example, in medical research, adopting a venture philanthropy approach entails oper- ating within the translational space, working through one’s funding and strategic leadership to help draw discoveries out of the academic sector and into the hands of parties with the ability to commercialize new thera- pies. A venture philanthropy strategy is unique in that its mission is aligned with philanthropic goals and outcomes—namely, new therapies and cures for diseases—and whose efforts are supported primarily by individuals and foundations whose urgency for such cures is great. The standard approach to research funding has not demonstrated sufficient results, and venture philanthropy represents a new model by which

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3 INTRODUCTION patient-relevant outcomes may be more quickly achieved. In the case of this workshop, many of the strategies discussed are focused on becoming more directly involved with the drug development process while relying on the generosity of foundations, wealthy individuals, and other sources of nongovernmental funding. The Need and Risks The reality is that drug development—even for large, relatively well- funded diseases—is a very slow process. Joyce Nelson, president and chief executive officer of the National Multiple Sclerosis Society, shared some sobering statistics during the workshop’s opening remarks. Prior to 1993 there were essentially no effective treatments for multiple sclerosis. In the past 15 years, only six partially effective treatments have been ap- proved, and a cure seems far away. Across the disease landscape in any given year, the FDA approves only 12 to 16 truly novel therapies (new molecular entities). For every drug that receives FDA approval, 10,000 fail. Workshop participants discussed the new reality in industry-driven drug development. As drug development costs have risen, due primarily to the high failure rate present in every stage of drug development, an increasing number of companies are reducing or halting investments in risky, early-stage product candidates in favor of later-stage opportunities with a greater likelihood of success. At the same time, the “blockbuster” mentality of many pharmaceutical companies—which is directly tied to this same high cost of drug development—has limited the development of drugs for smaller or more challenging diseases. The risks are simply too high for the private sector to tackle alone. Recognition of this new reality is what is driving voluntary health organizations into venture phi- lanthropy, said Coetzee. Michael J. Fox put it this way (as quoted by Nelson): “The tough truth is that the drug development funding system is broken where risk is highest.” Venture philanthropists, therefore, need to get in early, where the risks are highest, and fund the research that will attract the capital markets later. “As patient advocates, we exist to make a difference in the lives of our constituents,” said Nelson. “Venture philanthropy is a tool for advancing research that will transform lives. It is the human return, not the financial return, upon which we must focus.”

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4 VENTURE PHILANTHROPY STRATEGIES TRANSLATIONAL RESEARCH The workshop focused specifically on using venture philanthropy strategies to support “translational research,” a tricky phase in the drug development process that bridges the gap between the halls of academia and commercially funded clinical trials. Translational research is a broad term used to describe the process of translating the basic biology of a disease into real-world therapeutics in the lives of patients. Because the term is so broad, it can be difficult to bring organizational focus to the shared challenges and opportunities that a full-spectrum approach to ven- ture philanthropy can bring. Dennis Choi, vice president of Academic Health Affairs at Emory University, discussed a commonly agreed upon schematic of transla- tional research that begins at the identification and validation of targets for research and ends with clinical research trials (Figure I-1). A Precompetitive Funding Model Several associations and federal agencies, such as voluntary health organizations, the National Science Foundation, the Department of De- fense, and the National Institutes of Health (NIH), fund the best ideas in academia research, the most promising of which are picked up by indus- try. The knowledge and technologies from this research may initially fall under the precompetitive space, an area where companies, sponsors, and developers can collaborate on research and development in a space that does not confer a competitive advantage to any individual partner (IOM, 2008). However, the current linear model for conducting and funding drug development research is problematic, said Choi, because it puts dif- ferent types of organizations working at discrete points of the value chain with little or no overlap (Figure I-2). Basic Clinical Translational Research Research Develop. Clinical Target Assay HT Lead Preclinical Safety Phase Research Exploratory Identification Develop- Screening Optimization Efficacy Tox/ADME 1/2/3 Phase Validation ment 1/2 FIGURE I-1 Translational research model. SOURCE: Insel, 2008.

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5 INTRODUCTION Nonprofit Academia Organizations Industry and NIH FIGURE I-2 Precompetitive funding model, linear process. SOURCE: Choi, 2008. Choi described some of the challenges related to his own institu- tion’s work on central nervous system diseases: the multitude of ex- pressed targets, the difficulty of crossing the blood–brain barrier, the limitations of current animal models, the length of treatment required, and the difficulties of clinical trials. Because the central nervous system is so complex and provides difficulties for drug development, the current linear model where different players work independently from each other simply does not work in his opinion. Choi illustrated a different model where in a precompetitive space, each entity works in partnership to advance science in an environment of collaboration (Figure I-3). Even within industry, the individual small- scale players would band together to fund core research that will benefit everyone over the long term. Choi believes this model is both possible and recognized as neces- sary by the stakeholders involved. This move toward a new model, where voluntary health organizations, academia, and private industry work together for the benefit of each, framed a fundamental question: How can we bridge this gap? Fortunately, there are some examples for how it has already shown success. The Alzheimer’s Disease Neuroimaging Initiative (ADNI) was a partnership launched a few years ago by the National Institute on Aging and includes representation from several NIH institutes, foundations, and industry (ADNI, 2007). The Foundation for the NIH (FNIH) is another example and includes a cohort from the NIH, Food and Drug Adminis- tration, and the Pharmaceutical Research and Manufacturers of America (FNIH, 2008). These, among other collaborations, illustrate how various groups are working together in a precompetitive space to advance the understanding of a disease or group of conditions.

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6 VENTURE PHILANTHROPY STRATEGIES Nonprofit Academia Organizations; NIH/FNIH Industry FIGURE I-3 Precompetitive funding model, partnership focused. SOURCE: Choi, 2008. ABOUT THE FORUM AND THE WORKSHOP The Forum on Neuroscience and Nervous System Disorders (the Fo- rum) was established by the Institute of Medicine (IOM) in 2005 to bring together the public and private sectors, among other key stakeholders, to discuss issues of mutual interest and concern on topics of common and critical importance, particularly those issues and topics that stimulate partnerships to accelerate understanding and treatment of nervous system disorders. Recognizing that there was much that voluntary health organi- zations could learn from each other’s efforts, an independent planning committee of the Forum organized a workshop to discuss this new model for financing medical research. The workshop convened a group of key stakeholders and experts representing a variety of voluntary health organizations involved in ven- ture philanthropy–supported translational research and tasked them with identifying and sharing the best practices used, and lessons learned, in order to improve efficiency and effectiveness in translational research. 2 The breadth of experience was the best asset. Some of the invited indi- 2 To download presentations or listen to audio archives, please visit http://www.iom. edu/CMS/3740/35684/57121/57131.aspx.

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7 INTRODUCTION viduals represent organizations that have been running venture philan- thropy programs for years and are involved in clinical trials; others are still in the discovery or development stages. Some are on the funding side of the equation; others are the recipients. Recognizing that the topic was broad, the planning committee structured the workshop around a single hypothetical case study. Workshop participants were furnished with a basic scenario to guide presentations and discussions (see Appen- dix B for workshop agenda). In the case study, a hypothetical voluntary health organization, the Colten Foundation, is seeking advice on estab- lishing a translational research program for the development of a novel drug, biomarker, or diagnostic tool. The Colten Foundation is attempting to anticipate, and get ahead of, the challenges it may encounter. It is in- quiring how other organizations that have faced these challenges have tackled them as it seeks to establish best practices, solicit general advice, and, it is hoped, position itself for success. The workshop was co-chaired by Timothy Coetzee, executive direc- tor of Fast Forward of the National Multiple Sclerosis Society, and Wil- liam Thies, vice president for medical and scientific relations at the Alzheimer’s Association. In this workshop summary, key pieces of ad- vice and experiences are attributed to one individual, or when multiple parties were involved with fashioning or honing a single idea or insight, the idea is attributed to the key parties involved. The summary follows the flow of the workshop, mirroring how the day progressed from gen- eral discussions to more specific topics, and section headings are organ- ized to reflect shifts in topic and focus. This workshop summary does not put forth specific recommenda- tions or consensus statements by the IOM or the Forum, but rather serves as a mechanism for various stakeholders to share their experiences and advice. A number of issues were addressed over the course of the day, and, while not exhaustive, some of the major themes that were supported by several participants are emphasized below. First, the importance of knowing the organization’s strengths, weaknesses, and goals will help to reinforce when an organization can and should become a central player and leader in the field, when partnership with others is most valuable, and how to prioritize areas of consideration that are in keeping with the organization’s mandate. Second, the significance of adaptability in major processes (grant making, partnerships, reorganizations, and failures) will keep the organization from plateauing or faltering from its mission. Fi- nally, the organization’s role as a liaison to and spokesperson for the pa-

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8 VENTURE PHILANTHROPY STRATEGIES tient community is invaluable. What the organization provides for pa- tients (e.g., education, advocacy, support, leadership) is just as important as what the patients provide the organization—be open and prepared to really listen to the patient community. A complete list of key points can be found at the end of each chapter.