Venture Philanthropists: Mission-Driven for Cures
By: Maria Oldenburg and Baiju Shah
Twenty years ago, a new funding trend known as venture philanthropy emerged to support translational research and drug development, allowing nonprofit and philanthropic funders to enter the impact investing space and bridge medicine’s valley of death for the benefit of patients. Disease foundations—who in many cases wear multiple hats as disease advocates, patient support systems, treatment experts and research incubators—were among the initial pioneers of venture philanthropy and have successfully used these targeted funds in recent decades to accelerate the development of promising therapies for the patients that they serve.
Disease foundations fill a gap, providing funds and support where traditional venture, angel, and industry investors do not typically tread. The foundations are passionate and tireless in the pursuit of care for their patients. They are also mission-driven to find better therapies and cures, and they are able to support promising translational research for many diseases, including orphan diseases, that are considered too high-risk for traditional funders.
The slow rate and scarce support for translational research and drug development motivated the Cystic Fibrosis Foundation (CFF) to lead the venture philanthropy movement in the late 1990s. The CFF began offering translational research funding to for-profit biotech companies in the form of grants with a returns structure tied to royalties from newly-developed medicines. This was a radical change for disease groups, who had primarily supported academic researchers until that point, but the expansion allowed the CFF to support pre-clinical and eventually clinical drug development initiatives that were in danger of dying in the valley of death. Similar motivations prompted The Leukemia & Lymphoma Society to launch their Therapy Acceleration Program in 2007, a venture philanthropy initiative that supports applied research in partnership with biotech companies. Another pioneer was the Alzheimer’s Drug Discovery Foundation, a partner of the Harrington Discovery Institute.
Disease foundations’ venture philanthropy initiatives have had many successes. The partnership between the Cystic Fibrosis Foundation and biotech company Aurora Biosciences (acquired later by Vertex Pharmaceuticals) led to the development of Kalydeco, the first FDA-approved drug that addresses the underlying cause of cystic fibrosis, in 2012. As CFF explains, their “targeted investment with Aurora Biosciences had paid off for thousands of people with cystic fibrosis” who benefitted from Kalydeco, and the return on investment received by the CFF safeguards its ability to continue to invest in further treatments and support for cystic fibrosis patients. Similarly, a partnership between Celator Pharmaceuticals and The Leukemia & Lymphoma Society’s Therapy Acceleration Program led to the creation of Vyxeos, a drug to treat acute myeloid leukemia (AML), one of the deadliest forms of blood cancers. Until Vyxeos’ FDA approval in 2017, the standard of care for patients with AML had not changed for nearly 40 years.
Bolstered by these successes, more and more disease foundations have begun extending initiatives in venture philanthropy and impact investing. The Muscular Dystrophy Association’s MDA Venture Philanthropy, the JDRF T1D Fund driven by the Juvenile Diabetes Research Foundation, the Michael J. Fox Foundation for Parkinson’s Disease, the Foundation Fighting Blindness, as well as many others, have invested tens of millions of dollars to support translational research within their respective disease areas. These foundations and others pursuing such initiatives are on a course to produce many more successful outcomes for patients.