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Nonprofits are bridging R&D’s valley of death

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Early-stage drug development typically comes with a heaping side of financial risk. As a result, promising academic research discoveries can languish in the uncertain R&D stages because there is no commercial funding to prove their market potential. Increasingly, nonprofits are stepping in to fill this gap, backing new ideas and bringing them to a point where pharma companies are willing to invest and carry them past the regulatory finish line.

In fact, several groundbreaking new drugs approved in recent years for conditions like cystic fibrosis and amyotrophic lateral sclerosis (ALS) were partially backed by charitable donations.

Mark Veich, president, Advancium Health Network

Permission gratned by Mark Veich


“The nonprofit model is enabling the development and advancement of much-needed solutions that would not otherwise garner support from the investment community because of a lack of commercial viability,” said Mark Veich, president of Advancium Health Network, a New York City-based public charity.

Advancium was launched in February 2022 by the investment firm Deerfield Management and its nonprofit affiliate, Deerfield Foundation, which is looking to embrace the model.

“Advancium’s mission is to advance healthcare and health equity by facilitating philanthropic investment in new ideas, organizations and initiatives that address health economic disparities, underserved patient populations, health equity challenges and difficult-to-treat conditions,” Veich said.

The nonprofit comprises two main organizations: CobiCure, which is aimed at finding therapies and medical devices to treat children with rare, life-threatening diseases; and Cure Innovation Labs, an incubator designed to give early-stage companies access to specialized equipment and resources to help them bring new ideas through R&D. It will primarily work with post-seed, pre-series A companies, according to Veich.

“Cure Innovation Labs is assisting promising-growth companies by reducing their overhead costs and lowering barriers to entry into life-science incubators and the industry more broadly,” he said.

A model for success

Advancium is hoping to achieve some of the success seen by other nonprofit organizations.

“Over the past decade, we have witnessed blockbuster successes born from careful investments by nonprofits,” a 2020 report from the Milken Institute stated.

A shining example is the Cystic Fibrosis Foundation (CFF), which plans to spend a half billion dollars through 2025 in search of a cure for the genetic life-threatening lung disorder. Its past investment already led to the discovery of Kalydeco by Vertex Pharmaceuticals, which was approved in 2012.

“The foundation provided seed funding to Vertex Pharmaceuticals and earned a $3.3 billion payout from the success of the drug Kalydeco, which was recycled back into the R&D efforts within the (cystic fibrosis) community,” states the Milken Institute report. As a CFTR modulator, Kalydeco targets the underlying cause of the disease.

CFF-backed research also helped lay the groundwork for other critical drug breakthroughs in this category, including Vertex’s combination therapy Trikafta, which came on the market in 2019 as a new option for many people with cystic fibrosis, and was heralded as a “breakthrough” by the FDA. Most recently, Trikafta showed in a long-term study to maintain a “historic” improvement in lung function over two-and-a-half years.

“Greater support and infrastructure at these stages can enable the pursuit of more innovative ideas, enable higher probabilities of success, and instill a proper commercial mindset.”

Mark Veich

President, Advancium Health Network

Similarly, support from the ALS Association — which received a hearty infusion of donations from the Ice Bucket Challenge, a 2014 fundraising effort that went viral — helped pave the way for the September 2022 approval of Relyvrio, a drug by Amylyx Pharmaceuticals. It’s the first approved ALS drug to slow the progression of this devastating neurodegenerative disease and extend survival.

Advancium took note of these earlier successes, and in particular, the model used by the CFF, said Karen Heidelberger, chief partnership and communications officer at Deerfield Management.

“That’s an incredible model, how they’ve been able to work to develop a drug and then are able to continue to work in the space that they’re interested in,” she said.

Funding progress

A $30 million donation to Advancium from the Maxine and Stuart Frankel Foundation in October 2022 will help support both CobiCure and Cure Innovation Labs, in addition to a new initiative to fund as many as eight experimental drug development projects per year over the next decade, Veich said. 

“The projects will focus on promising therapeutic concepts that have a well-defined therapeutic hypothesis but that require further exploratory work to de-risk and determine their viability as prospects for seed funding and other private investment,” he said.

Advancium will work with academic laboratories to evaluate emerging research programs.

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