Invest in Cures Forum Presents New Funding Alternatives
North Carolina’s entrepreneurial companies had an opportunity to learn more about alternative funding sources through the venture arms of disease foundations at a November 1, event at the NC Biotechnology Center. Invest in Cures featured investment professionals from nine national nonprofit disease foundations, one international health nonprofit and one for-profit company partnering with a disease foundation, in a forum from 4-7 p.m. In three moderated panel discussions, plus question-and-answer time, they discussed their investment philosophies, fund and deal structures and described how they are using deep scientific knowledge to validate early-stage technologies and syndicate with other investors.
Nonprofit disease foundations are an emerging community of investors in life science companies. Increasingly, they are making investments to accelerate the pace of commercialization of technologies that may provide new therapies and cures for patients. Traditionally, such foundations have focused solely on making grants to academic researchers. Now they are creating a range of investment vehicles, including taking equity positions in startups, to achieve their missions.
“We are interested in new sources of capital for early-stage life science companies, and see non-traditional investors, such as these foundations, as an important addition to the network,” says Joan Siefert Rose, CEO of LaunchBio. “As disease foundations start venture arms and add investment professionals to their teams, the organizations hosting this forum want to make sure they are meeting other investors and learning about promising companies in North Carolina. Our expectation is that they will find good opportunities here, and return frequently,” she said.
Moderating the first panel was Eric Linsley, co-founder of BioLabs NC and managing general partner of BioInnovation Capital. Panelists were: Jonathan Behr, Ph.D., managing director, T1D Fund, Juvenile Diabetes Research Foundation; Barbara Tate, Ph.D., venture partner, Dementia Discovery Fund (DDF); and Ben Yerxa, Ph.D., CEO, Retinal Degeneration Fund, Foundation Fighting Blindness (FFB).
Behr explained that the T1D Fund’s mission is to accelerate treatments for Type 1 (autoimmune) diabetes through “catalytic commercial investing,” which he described as using a venture model for investing donated funds. Tate described DDF as focusing on pharmaceutical therapeutics for all types of dementias in the model of a “mission-oriented venture fund, which expects a return on investment.” It is the first venture fund in the world that includes government; the United Kingdom is an investor.
Yerxa described the FFB as “the largest private funder of retinal research in the world.” It has been funding academics for years, but it is now adapting its model to fund “milestone-based projects within academia, a little bit of venture philanthropy, equity investments in startups and co-funding projects within industry,” said Yerxa. It, too, is seeking a financial return on investment for sustainability.
Moderating the second panel was William Wofford, attorney, Hutchison, PLLC. Panelists were: Debra Miller, president and CEO, CureDuchenne Ventures (CDV); Richard West, founder and CEO, Baebies; and Chris Penland, Ph.D., vice president, Biopharma Programs, Cystic Fibrosis Foundation (CFF).
Penland, described the structure of his fund’s investments in Spyryx Biosciences to spur research and clinical trials in the pathway that inhibits sodium absorption, a known feature of Cystic Fibrosis. Spyryx was formed to commercialize a discovery by University of North Carolina at Chapel Hill’s Robert Tarran, Ph.D., associate professor of cell biology and physiology. NC Biotech gave the company a $50,000 startup loan. Together with a total of $5 million from CFF, it was able to leverage an $18 million Series A investment from a venture capital syndicate.
Miller and West described the unique partnership between CDV and Baebies, producer of newborn screening kits. CDV is an equity holder in Baebies. Miller explained that with advancements in treatments and genetic developments underway in clinical trials, it has become important to identify patients earlier in life who have Duchenne muscular dystrophy to connect them with appropriate interventions. Currently, Duchenne is not on the standard newborn public health screening panels. Together, the two organizations hope to change that.
“There is a quicker, better way possibly of getting this done,” said Miller, referring to the speed with which her organization could make a deal with a life science startup, such as Baebies, compared to the lengthy process of negotiating a contract with an academic institution.
Moderating the third panel was Christy Shaffer, Ph.D., partner, Hatteras Venture Partners.
“I am thrilled to see this many people in a room talking about rare diseases and investing in a cure,” said Shaffer, a former researcher in rare diseases at Burroughs Wellcome, noting the standing room-only crowd.
Panelists were: Mark Allegretta, Ph.D., vice president of research, National Multiple Sclerosis Society (NMSS); Wellington Pak, director of strategy and president of FHI Ventures, FHI 360. Bob Crutchfield, managing director, BrightEdge Ventures Fund, American Cancer Society (ACS); and Gerard Honig, Ph.D., president and CEO, IBD Ventures, Crohn’s and Colitis Foundation.
Allegretta described, Fast Forward, a separate entity of NMSS using a venture model to invest in drug development and research related to MS.
“FHI Ventures invests in post-prototype and early pre-revenue companies” in the sectors of interest to FHI 360 – health, education and economic development, said Pak.
Crutchfield was only 8 weeks into his position with the BrightEdge Ventures Fund of ACS, which launched September 4. He described the fund’s structure of investing in acceleration of cancer therapeutics. Honig then described the process for how IBD Ventures is investing in product development in the areas of Crohn’s Disease and ulcerative colitis.
LaunchBio is a nonprofit organization with hubs in Durham, San Diego, Boston and soon New York City. It identifies, counsels, and supports high-growth, high-impact life science and biotechnology companies, and holds monthly gatherings for the biotech community, called Larger Than Life Science. Invest in Cures was part of this series.