Innovation in biotech R&D: New resources offer new hope – STAT

Public optimism about American health care seems in short supply if you read the news, which is dominated by coverage of partisan fights over the Affordable Care Act and the continuing crisis of opioid addiction. But innovation in the life sciences sector offers reason to cheer. We’re seeing vital new approaches to research and development driven by the private and philanthropic sectors, focused both on how we finance research and development and how we conduct it.

I’ll start with the finance side of the equation. The center of gravity, as always, is the federal government. Two years ago, Jeffrey Bluestone, Laurie Glimcher, and I argued in STAT that the National Institutes of Health risked losing its edge in biomedical innovation. Since then, the landscape has shifted: We are now seeing significant increases in funding for NIH, which is great news.

Credit for the shift belongs to a bipartisan group of legislators who have worked to increase the NIH budget by nearly 40% in five years, reaching $41.7 billion per year today. NIH Director Francis Collins and his leadership team also deserve credit for sustaining long-term projects like the All of Us Research Program to map the genomes of 1 million Americans, the BRAIN Initiative, and new programs to improve funding for younger researchers.

We’re seeing parallel shifts in the private sector. Large pharmaceutical companies are the main force behind a nearly 40% increase in R&D investment in recent years, reaching roughly $130 billion today. Further, in 2018, venture investors — including corporate entities — put more than $17 billion into early-stage biotech investing, much of it in U.S.-based, early-stage companies. These investments bode well for the future of health care because more than 60% of products the FDA approves originate in small companies.

Another beacon of hope comes from innovation by a group of philanthropists, socially minded venture investors, and foundations that provide both traditional grants and commercial investments. Paired with longstanding government and industry activity, these three structures are fostering a more robust environment for funding R&D. In this environment, philanthropists and firms like ARCH, Atlas Venture, Deerfield, RA Capital, Third Rock, Venrock, and others are creating startups directly from university spinouts.

The most intriguing advance might be the possibility of expanding program-related investments (PRI) of the type undertaken in recent years by the Chan Zuckerberg Initiative and the Ford, Gates, and Hewlett Foundations. I’ll outline a few examples to bring this approach to life.

Focusing on cancer immunology, the Parker Institute for Cancer Immunotherapy has forged an unprecedented collaboration with seven centers of research, with 330 researchers and multiple clinical trials addressing the most complex and pressing issues in the field. The institute has also been a seed or Series A funder of several early-stage companies spun out of its centers. It may only be 4 years old, but the Parker Institute’s approach calls for replication.

A second example of R&D innovation, this one university-based, combines incubators with accelerators, the idea being to encourage innovation and commercialization. Berkeley, Harvard, MIT, Rockefeller, Stanford, UCSF, Weill Cornell, and hospitals such as the Dana-Farber Cancer Institute and Memorial Sloan Kettering Cancer Center are leaders in this area. They share the view that the traditional approach — a single researcher supported by a technology transfer office — is not sufficient to get inventions to patients. New third-party venture firms are involved in these efforts, partnering and accepting financial risk at earlier stages.

The third example includes program-related investments in platforms of investments in both for- and nonprofit entities, such as Vir Biotechnology and HIV/AIDS, or in technology, such as the development of new manufacturing or diagnostics tools. This approach stands to advance the entire field of life science research. The Gates Foundation, RA Capital, and others who make program-related investments focus on securing progress that also enables science or technology rather than purely aiming for financial returns.

The potential for more PRI-style investments is gigantic, with only 2% of foundations currently deploying them. The life sciences sector should set ambitious goals to double or triple this style of investing in the years ahead.

Refining and replicating the models created by the Gates Foundation, Parker Institute, and ambitious venture firms will take the life sciences sector to new heights. We are already seeing a new harvest of scientific advances, with the FDA approving 107 new products in the past two years, far above historic averages. Many of these new medicines target rare diseases and cancers and deploy new tools like gene editing.

With continued partnerships and innovative funding options, the hope of breakthrough treatments and cures leaves me ever more optimistic — for patients and for society.

David Beier is a managing director at Bay City Capital, which partners with Rockefeller University, Memorial Sloan Kettering Cancer Center, Takeda Pharmaceutical Company, and Deerfield Management in Bridge Medicines. He was an adviser to the Parker Institute for Cancer Immunotherapy from 2017 to 2018.