Now Is The Time For Philanthropic Venture Capital
By Michael Andreini and Stephanie Oestreich, Ph.D., MPA
Even in the best funding environments, raising money for drug discovery is an enormous challenge. It takes about 10 years and upwards of a billion dollars to move a drug candidate from the lab through the clinic to commercial approval.
And yet despite some incremental optimism at this year’s BIO conference in June, the funding challenges remain. The industry has suffered a two-year capital slowdown that saw more than 120 publicly traded biotechs lay off staff, resulting in more than 10,000 lost jobs. Even a flurry of M&A and fundraising in the first quarter hasn’t created a truly welcoming capital environment. Biopharma companies raised $6 billion in the quarter, the most since the second quarter of 2022, but the rebound remains spotty, and many venture capital funds still shy away from investments in early-stage drug discovery.
Therapeutic Area Expertise, Longer Payback Cycles
That’s what makes philanthropic venture capital so important and attractive right now. Philanthropic VC is patient capital, with a longer payback cycle than most VC investors can tolerate. A philanthropic VC investor is also typically the best-informed member of a funding syndicate within a specific disease area. This helps to significantly de-risk a projected round of funding and attract additional investors.
The multiple myeloma blood cancer space illustrates the current challenging fundraising environment, and the way philanthropic venture funding can help. More than 35,000 Americans are diagnosed with multiple myeloma each year, and over 12,000 die from the disease. Five-year survival rates for multiple myeloma range from 40% to 82%, depending on how far the disease has advanced before diagnosis. There is no cure, and most patients continue to become resistant to treatment as the cancer mutates during future relapses. Newly approved treatments have offered new hope to multiple myeloma patients but have not yet delivered cures.
Despite this high unmet need, we’ve run up against a perception on the part of prospective investors that this is a “crowded” disease space and that the needs of patients have been “solved.” In addition, many prospective investors struggle with the sheer complexity of myeloma treatment, which often has patients see between five and seven lines of treatment and multiple potential combinations of existing therapies.
The Multiple Myeloma Research Foundation (MMRF), the leading research organization and patient advocacy group in the U.S., founded the Myeloma Investment Fund (MIF) five years ago. The MIF has over $20 million under management and has invested an aggregate of $18 million in 13 companies. We have a unique model that prioritizes social impact over immediate financial returns. And while many commercial funds seek to return capital to their investors within three to five years, the Myeloma Investment Fund has a longer time horizon, often covering the entire time from inception to a company’s acquisition or IPO.
The Myeloma Investment Fund is a key component of the MMRF’s work to accelerate the development of new therapies for patients with multiple myeloma. One of the reasons we find investment incredibly promising is that we get to leverage the energy and ambitions of a young biotech company while offering tremendous value and support to their efforts. Apart from the dollars, the MIF — and other philanthropic VCs — can provide strategic expertise to help improve the probability of success for early-stage companies.
For example, the MMRF has robust data assets like CoMMpass, a landmark patient registry and biobank with more than 10 years of clinical outcomes data paired with deep genomic sequencing and immune profiling. The CoMMpass study continues to drive significant scientific advances for the broader myeloma field, and for emerging companies with exciting therapeutic platforms, it can help identify and validate novel targets and inform clinical trial planning and design.
Further, the MMRF sits at the center of the myeloma ecosystem and can build important connections between MIF’s portfolio companies and a robust network of academic medical institutions, investigators, and KOLs to assist with preclinical experiments and clinical trial execution.
Finally, the MMRF team itself has deep scientific and clinical expertise in myeloma and drug development that can serve in an advisory role to MIF companies on development plans and even market positioning.
Philanthropic VC Stimulates Additional Investment And Advances Therapies
A philanthropic venture fund’s participation in a funding round provides a vote of confidence that can help attract larger investors. After the MIF made an initial investment in late 2020 in Indapta Therapeutics, an early-stage immunotherapy platform focused on natural killer cell therapy, we were then a part of a $50 million Series A capital raise in early 2022 that included several other investors, including RA Capital, Vertex Ventures, and Leaps by Bayer. Indapta has recently initiated its clinical trial and has started raising a Series B.
In the evolving biotech funding landscape, philanthropic venture capital stands out as a beacon of hope, addressing funding gaps and advancing transformative therapies that patients need desperately. Its role becomes even more crucial in a challenging funding environment, where traditional sources of investment are scarce.
By aligning capital with benevolent goals and easing the pressure to generate short-term returns for investors, philanthropic venture capital accelerates scientific breakthroughs and ensures that the benefits of biotechnology reach those patients with high unmet medical need. As we look to the future, this symbiotic relationship between early-stage companies and philanthropic venture capital will play a pivotal role in facilitating the much-needed discovery of new treatments for multiple myeloma patients, and those suffering from many other diseases.
About The Authors:
Michael Andreini is president and CEO of the Multiple Myeloma Research Foundation.
Stephanie Oestreich, Ph.D., MPA, is the managing director of the Myeloma Investment Fund.