Economy Makes Disease Foundations Get Choosier

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drop in donations this year. The recession has prompted the White Plains, NY-based society—which has invested in eight biotech firms including Cambridge, MA-based Ensemble Discovery—to focus on helping biotechs get early clinical data and validation. Formal, Beall and other disease group officials were on a panel discussion focused on disease foundations during the MBC conclave.

At least through last year, disease foundations’ investments in biotech outfits were on the rise. Boston-based research firm CenterWatch reports that disease foundations invested a total of $75 million in life sciences companies in 2007, and projected—albeit before the recession went into overdrive in late September—that the figure would rise to $90 million in 2008. (Rebecca compiled a list of several biotech firms in the Boston area on the receiving end of this venture philanthropy boom earlier this year.)

However, biotech firms with foundation support have not been immune to the realities of the recession. Beall (pronounced “Bell”) said in an interview that some of the companies his foundation has backed to develop drugs for cystic fibrosis are running short on capital, and his group is even working to help some of those biotechs move its cystic fibrosis programs to companies with enough money to pay for the projects. (Cystic fibrosis, which affects about 30,000 Americans, is a chronic disease that impairs lung and digestive functions.) Beall wouldn’t name names. We know that two CF Foundation-backed companies that have been shedding working to conserve capital include CombinatoRx (NASDAQ:CRXX), of Cambridge, and Lexington, MA-based Epix Pharmaceuticals (NASDAQ:EPIX). Both have publicly stated that they remain committed to their cystic fibrosis programs.

Beall says that he is not concerned that companies will decide to drop their cystic fibrosis projects altogether because the foundation covers much of the development costs. Still, he says, the foundation expects to reduce its own medical research budget by 10 percent to 15 percent and has to be careful to choose biotech partners that are capable of paying their share of development costs.

The Michael J. Fox Foundation, founded by its namesake after he was diagnosed with Parkinson’s, isn’t expecting a drop in its $25 million to $30 million annual budget this year, said Sohini Chowdhury, director of industry strategy for the New York-based foundation. But given the economy’s impact on biotech companies, she noted, “we realize that we are going to have to be pickier about what we fund.”

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