Looking to Speed Drug Development, More Nonprofits Are Backing Drug Trials

Fed up with medical discoveries that fill journals rather than medicine chests, private foundations and charities that have traditionally funded academic researchers are awarding millions of dollars to for-profit companies, the Wall Street Journal reports.

Because the Food and Drug Administration approves fewer than one in a thousand new drugs, pharmaceutical companies are reluctant to spend money on developing even the most brilliant drug discovery unless it has ten-figure sales potential. Another factor working against the development of promising new drugs is venture capitalists' desire to see their biotech bets pay off in just a few years — a mind-set distinctly at odds with the lengthy drug-development process.

As a result, an increasing number of nonprofits willing to pay to "de-risk" compounds and keep otherwise promising drug trials from stalling are looking to hook up with drug companies. Spurred on by disgruntled parents anxious to find a cure, the Juvenile Diabetes Research Foundation recently announced it will give $2 million to MacroGenics, Inc., a Maryland-based biotech company, for a phase 2/3 clinical trial of an antibody that could slow progression of type-1 diabetes, which affects 1.7 million Americans. The deal follows on the heels of a multimillion-dollar commitment by the organization in 2006 to fund clinical trials by biotech companies in California, Massachusetts, and Canada. Elsewhere, the Michael J. Fox Foundation , the Families of Spinal Muscular Atrophy , and the Myelin Repair Foundation are taking similar steps to help bridge the translational research gap.

At the same time, charities understand 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.'"

Sharon Begley. "Why Nonprofits Fund Companies That Do Drug Research." Wall Street Journal 01/26/2007.