Why Nonprofits Fund For-Profit Companies Doing Drug Research

An interesting article appeared in last week's Wall Street Journal on the role that non-profits are taking in drug development. Nowhere is this more evident than in treatments for type 1 diabetes, which is usually overlooked by big pharma in its neverending search for more treatments for the massive type 2 diabetes market while type 1 patients have seen little innovation for our condition. In fact, it was kind of a coincidence that the first new treatment for type 1 diabetes, Symlin (pramlintide acetate), which is a synthetic version of another hormone made by the beta cells, even received FDA approval and was brought to market in late 2005. Symlin was the first fundamentally new treatment for type 1 diabetes since the discovery of insulin in 1922, bringing the grand total to two (actually, Symlin cannot be used by itself, so does that even count as a whole treatment?). By comparison, there were twice that number of new treatments for type 2 diabetes in just a two-year period from 2005-2006 (Byetta (exenatide), and another new one called Januvia (sitagliptin phosphate) which received a lot of attention at last year's ADA Scientific Sessions). And don't be fooled; its not that insulin is such a terrific treatment, either. If it were to apply for FDA approval using today's standards for adverse effects, it would probably not even be approved because insulin is responsible for so many hospitalizations due to nasty side-effects like hypoglycemia (some 58,000 per year according to the Journal of the American Medical Association -- more than any other drug sold). The simple fact is that 1.7 million patients (according to the following article) is simply not sufficient to attract the interest of the pharmaceutical industry.

The newest type 1 treatment (which is an adjunct therapy to insulin replacement), Symlin, might never have even been commercialized if the company responsible for it didn't have a potential blockbuster Byetta for type 2 diabetes in its pipeline, too. Lilly was salivating over the profit potential for Byetta, and happened to agree to commercialize Symlin in order to land the deal. You might notice that Symlin is also positioned in marketing materials as a type 2 drug, when the reality is that most type 2 patients have more amylin than their bodies know what to do with and its benefit for type 2 patients is marginal at best. In effect, Amylin Pharmaceuticals was able to strong-arm its pharmaceutical partner Eli Lilly and Company to commercialize Symlin (its either both, or you don't get Byetta). Symlin had many more years of research behind it, but Lilly probably wouldn't have even considered it if it weren't for the potential of Byetta. That was luck, but that does not always happen, so non-profits like JDRF are stepping in to fill the gaps in to ensure that new treatments do come to fruition for type 1 diabetes.

Anyway, the following article was interesting reading ... some people are cursing JDRF's role in bringing new treatments to market arguing they should remain focused on a cure, while others think its a great move. What are your thoughts on this development and the role that JDRF is taking?


Science Journal: Why Nonprofits Fund For-Profit Companies Doing Drug Research
By Sharon Begley, The Wall Street Journal
January 26, 2007; Page B1

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.'"

You can email me at sciencejournal@wsj.com.

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