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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

In the Pipeline

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February 6, 2014

Crowdfunding Independent Research

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Posted by Derek

I've written about Ethan Perlstein's work here before, and now I note that the Wall Street Journalhas an article about his crowdfunding research model.

Ethan O. Perlstein for years followed a traditional path as a scientist. He earned a Ph.D. in molecular biology from Harvard, spent five years doing postdoctoral research at Princeton and led a team that published two papers on pharmacology.

But last year, Dr. Perlstein was turned down by 27 universities when he sought a tenure-track position to set up his own lab. Hundreds of candidates had applied for a small number of positions, the universities said, a situation made worse by cuts in federal research funding.. . .

. . .Still, Dr. Perlstein's approach is unusual because he isn't raising money to support a discrete project or product. "Ethan is doing basic research," said Jessica Richman, co-founder of Ubiome, a health and wellness startup that raised more than $350,000 through crowdfunding on a site called Indiegogo. "He is selling the idea that he is an independent scientist doing research."

Dr. Perlstein plans to launch his public appeal for Perlstein Lab this week on a site called AngelList. Perlstein Lab will focus on finding drugs to treat lysosomal storage diseases, in which cells fail to produce and recycle waste. The materials accumulate in cells and can cause a range of problems, including death.

Here's his profile page on AngelList, which seeks money from what the SEC calls "qualified" investors (high net worth individuals). I think that's probably a good idea - anyone who's done "angel" type investments before will have a more realistic idea of the chance of any return (you'd hope). Crowdfunding research, in general, is something that interests me a great deal, although it's easy to think of potential problems.

Comments (12) + TrackBacks (0) | Category: Business and Markets | General Scientific News


COMMENTS

1. Lu on February 6, 2014 1:45 PM writes...

Oh my god... how desperate he might be

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2. annon fore on February 6, 2014 2:14 PM writes...

Well, just another biotech trying to start up any way possible, just with a different back-story that might get it / him some added attention.

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3. dearieme on February 6, 2014 2:44 PM writes...

"a range of problems, including death": that raises a grin. At least they didn't say "issues".

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4. biotechtoreador on February 6, 2014 2:52 PM writes...

Good luck to him, but this seems a tough road. The publicity from WSJ will certainly help, and this crowdfunding may well work for a few people for a few years.

Maybe naively, but I don't see anything stopping academics from doing this either. Are there institutional policies that prohibit this?

I assume it was the 5 years as a PDF that did in his chances for an academic job?

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5. MDACC Grad on February 6, 2014 3:13 PM writes...

@4, if you do try to do this with an institution they have little to lose but tons to gain. I've tried something with my former institution (I even had several faculty who acknowledged the tech would be game changing, fwiw) however at the end of the day it made little sense to do it through a university. If you pull in external funds, the university gets a cut of the funds you raise (back at Anderson this was 50%), they get partial ownership (at Anderson this was also 50% after they cover any fees), and in my example they were unwilling the patent the idea. Basically assume 0 risk but take a substantial reward. For me it made no sense the throwaway substantial equity to have access to some core facilities (which I would have to pay for anyways) and getting the academic price on reagents.
If you have the funds, it makes more sense to go it alone. There may be exception for places like MIT or Harvard that have good ability to negotiate for you when you look to be acquired.

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6. anon on February 6, 2014 3:35 PM writes...

@4

5 years PDF is not a problem. Pretty much a new normal these days. In many sub-fields it is hard to get a first author glamour mag publication with less than 2-3 years of hard work. Since in biomedical fields glamour mag papers have a disproportionally large impact on academic hiring, majority of PI applicants are in their 4th, 5th, 6th year after PhD.

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7. MoMo on February 6, 2014 4:11 PM writes...

Sign me up! He led a team that published 2 papers in 5 years! In Pharmacology! From Harvard! At Princeton! 2 Papers!

Let the wheels of progress begin turning!

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8. MTK on February 6, 2014 5:01 PM writes...

A qualified or accredited investor is a specific term defined in Rule 501(a) of Regulation D. By getting investment only from qualified investors one substantially simplifies the amount of paperwork, regulatory approval, and potential legal problems.

This is something I'v always wondered about crowdsourcing. How entities handle not only the question of accredited investors but also getting around regulations which limit "general solicitations".

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9. Joe on February 6, 2014 5:46 PM writes...

The only way it works with small investors is they are given a product in return - or the promise of a product. So, if I invest $100 in his 'research' it is illegal according to the SEC (that is another story of government meddling) but if he in turn sends me say three coupons that can be redeemed for some product or service, it does not get the interest of the SEC.

Anyone who has not started from scratch to develop a medical product has no business criticizing this guy and his approach - it is very unusual to find an angel investment in dreams and it is really just a lot of average Joes and Janes giving a hundred or even a few hundred because they'd like it to happen and could care less if they get their money back but would be very pleased if it did - like, bonus time, baby. The government is all that stands in the way - and it is not stopping chicanery or charlatans by doing so - there are a lot of people out of work in this country with great experience and skills who could use start up seed funds from others who like a new idea - someone willing to chip in a few dollars for the hell of it - but that is really almost impossible now - because anyone who is a capitalist is a swindler by definition of the government.

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10. Paul Brookes on February 7, 2014 10:54 AM writes...

As I and others have discussed on Twitter (where Perlstein is quite active), one of the main issues facing anyone attempting to secure non-traditional funding, is what's in it for the investor? For Kickstarter etc. there are the usual "rewards" for a few dollars, but here we're talking a lot of money for which the reward is somewhat ethereal.

For the government, investing in basic science makes sense because the (very) long term payoff is societal health. For venture capitalists, the payoff is when the biotech company or whatever entity gets bought out, licenses their IP or makes a profit. For a philanthropist investing in a basic science lab, well I guess you'd have to ask HHMI or the Gates foundation what they feel they're getting for their money? Are there really legions of community-minded angels out there just waiting to invest in research? If so, there are plenty of University advancement officers who'd love to meet them.

The other key thing to note is that by going directly to the philanthropists, Perlstein is eliminating the middle man. With HHMI and other big organizations there's a level of screening (i.e. peer review), but for direct investment there's no such filter. That raises the possibility for an investor who doesn't know much science to get fleeced.

If I had that kind of money to throw around, I'd be directing it toward a larger philanthropic foundation with experience in selecting "worthy" projects based on transparent review criteria. As Derek's recent post on the stock market indicated, the investing public is terrible at making informed decisions about what is good science and what is not. I'm not saying anything about Perlstein's science, but clearly if he succeeds in this endeavor, others with questionable standards may follow.

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11. Anon on February 7, 2014 1:21 PM writes...

#7: Looks like you are another casualty of the publishing = promise culture.

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12. MoMo on February 7, 2014 1:44 PM writes...

No #11 Anon- I am not of that mindset either.

Seems a little green to me with no MENTION OF PATENTS-

When trying to make money in science they really mean a lot to investors.

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