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because patient needs are aligned more with the private sector – which does not turn a profit unless a treatment demonstrably improves the patient’s condition – than with the academic sector’s relentless need to publish.
Take for example the 2012 success of ivacaftor (Kalydeco), the first drug to treat an underlying cause of cystic fibrosis. Kalydeco was discovered by a biotech company and funded by the Cystic Fibrosis Foundation, which reimagined the traditional charitable model. Instead of giving multiple small grants to academic researchers, it placed a single $75 million bet on a for-profit company. Despite Kalydeco’s success, many disease-related charities continue to avoid working with the private sector.
But for how much longer? Health-related charities raised over $31 billion from the public in 2013, an amount equal to the GDP of Paraguay. At the same time, my own research indicates that donors increasingly want their money to go to organizations that have a realistic chance of putting effective treatments into the hands of patients by 2025.
This changing donor attitude, alongside the new $50 million limit for equity-based crowd funding with accredited investors, makes me optimistic that both equity- and donation-based crowdfunding will help fund the next generation of medicines. Impatient has chosen donations to allow the crowd to be open and to capitalize on the underutilized Kalydeco model that matches philanthropic capital with promising but unfunded medicines in for-profit companies. Which leads us back to the drug industry’s poor record of connecting with patients, donors and the public at large. Crowdfunding relies on the intrinsic trust people place in shared connections on social networks, and the ratings of other members of their crowd on mainstream websites. And this is where the problem lies for biotech.
Since the 1980s, when the U.S. pharmaceutical giant Merck (NYSE: MRK) was described as the ‘most admired’ company for seven consecutive years in Fortune magazine (a record never equaled before or since), the drug industry’s reputation has declined. If emerging biotech companies are to become accepted by the crowdfunding community, this decline must be reversed. The good news for biotech is that the three principles of effective crowdfunding – displaying transparency, earning trust, and building tribes – can change public perception.
The first of these principles, transparency, is very slowly taking root. The number of companies pushing the envelope are few and far between. One is the aptly-named Transparency Life Sciences (TLS) which develops its protocols through a collaborative relationship between patients, physicians and researchers using an online crowdsourcing tool.
Another is GlaxoSmithKline (NYSE: GSK), where I worked for six years on both sides of the Atlantic. A decade ago GSK became the first pharmaceutical company to publish online the results of its clinical trials, regardless of whether the trial failed or succeeded. Ten years on and the European Medicines Agency is now making clinical data transparency a requirement for companies with drugs approved for sale within the European Union.
Although transparency is slowly improving, industry reputations are not. This is largely because transparency feels as though it is tightly controlled with a distinctly corporate spin.
To earn trust—the second principle of crowdfunding—we need to make transparency personal. Biopharma communication today is primarily a one-way process with stuffy press releases, sterile PowerPoint presentations, and uninterpretable data repositories. By contrast, crowdfunders want online forums moderated by researchers (rather than PR agencies and lawyers), videos of scientists discussing the ups and downs of their research, and social media platforms on which patients and donors are able to interact with researchers.
Impatient is focused on transparency. As with other crowdfunding sites, donors will be able to target their funding to specific projects. This contrasts with traditional charity where donations are pooled and the charity decides how to allocate resources (typically with less than 30 percent of funds used for research). We will provide updates from the lab and will proactively seek the views of patients. Our focus will be individual rather than corporate communications. By earning the trust of donors we hope to build tribes around specific potential medicines. The success of Impatient will ultimately depend on my team’s ability to connect with our crowd. And our crowd is the largest of all crowds. Because we are all patients.