Here's a business idea for a nonprofit drug company, sent along by reader and entrepreneur Matt Grosso. I don't necessarily think that it would work (see below), but it's worth talking about, since some of its features are worthwhile. Others, though, illustrate what may be some common misperceptions of how drug development works. Here's the key feature:
The idea here is to create a non-profit which would accept contributions for testing and bringing to market specific drugs. . .Members would vote with their contribution dollars for specific drugs. Paid staff would curate a wiki that supported periodic comparisons between various candidates approaching readiness for a specific market, which would ensure that that member votes had the benefit of the best available information and expert opinion.
This could create an alternate route for drug startups focused on particular compounds to get their product to market.
I think that the ability to specifically take in contributions is a good one - people and organizations are more likely to fund defined aims that they agree with. One big problem, though, is that there's a limit to which we can define such things in this business. And that might make the whole idea break down.
To be honest, if a nonprofit really took in contributions for the development of specific drugs, they'd run a great risk of disappointing and enraging their donation base. That's because the honking huge majority of specific drugs in development never make it. The success rates in the clinic are pretty well known: roughly 90% of everything that goes into clinical trials never makes it to market. That's a hard sell for contributors! And if you moved the point at which you asked for donations back into the preclinical stage, the situation would get much, much worse. At the "Hey, we just thought of a neat new target" step, you'd be offering your contributors worse odds and payoffs than they could get in the state lottery.
For new compounds and new modes of action, the risks decrease in roughly the following order. At the same time, the time it takes to get an answer increases in the roughly the same way:
1. Specific single compound with a defined mechanism. Hold your breath, and good luck!
2. Defined chemical class of compounds targeting the same mechanism. Now you've got some fallback, although it might not be enough to help in case of trouble.
3. Specific mechanism, with several chemical series. This gives you several shots, although if your mechanism of action is off, all will still be in vain.
4. Phenotypic readout with a range of compounds (that is, they seem to do the right thing, but you're not sure how). Risk varies according to how realistic your assays are, and how many different compounds you've picked up.
5. Targeting a broad class of related mechanisms - for example, "reduce LDL", "disrupt bacterial membranes", "interrupt inflammatory cascade". Note that we're now getting farther and farther away from individual compounds.
6. Targeting one specific therapeutic area: antivirals, Alzheimer's, osteoporosis, etc.
7. Trying to balance things out with several therapeutic areas, with projects in each one at varying levels of risk.
Note that we've also illustrated the progression from "wing and a prayer startup" to "fully integrated drug company". That follows exactly from the levels of risk involved, which correlates with the amount of money on the table as well, in exactly the way the ranking of poker hands correlates with how likely they are to occur. Note also that even in that final stage, we apparently still have not mitigated the risks enough, given our cost structure. (Look at the state of the industry).
To get back to the nonprofit idea, another thing that might work out less well in practice than it does in principle might be that wiki for the potential investors/donors. This is what companies try to do internally: comparing their programs by the same criteria, head to head, then determining how to resource them. 'Taint easy. I don't know of any organization that truly thinks that they do as well at this as they should. Even a bunch of perfectly clear-headed and honest assessments (which, by the way, cannot be universally assumed) are still complicated by unquantifiable risks. I think that people might be alarmed by the number of times you just have to push things ahead to see what's going to happen.
Even after all these qualifications, though, I think that there's merit in the idea of breaking out individual drug development programs. I've long kicked around the idea of whether a company could fund programs by essentially selling shares in its various clinical candidates, with a cut of the profits coming if things work out. It would be an accounting mess, and everyone would have to keep those failure rates in mind, but there are still people who'd be willing to take a crack at it, for a given level of possible return. Those donors/investors might even be less put out than the charitable/nonprofit ones - everyone's had investments go bad, but no one wants to feel like their charitable donation was wasted. Thoughts?