Scripps Research president and CEO Peter Schultz discusses new funding models at the Spectrum meeting.
Nonprofit research institutes have faced a tough financial road. NIH budgets are stretched, philanthropy is unpredictable and technology transfer revenue is not filling the gap. In addition, many lab discoveries, which look so promising when published in Nature or Science or any respected publication, never come close to patients.
But now, Scripps Research President and CEO Peter Schultz is spearheading a new approach to drug discovery and sustainability that could bring the institute’s many discoveries closer to patients and – he hopes – put the institute back in the black.
“We wanted to build a new model,” said Schultz in a conference call, “that more effectively bridges the world of basic research and the world of drug discovery that’s historically been the purview of big pharma and biotech.”
These efforts were highlighted last week during the Spectrum, a one-day scientific conference with a touch of VC pitch meeting. The sessions showcased Scripps science and discussed the emerging model. Shotgun presentations shared recent work on immunology, regenerative medicine, childhood and neglected diseases and novel therapeutic strategies. Panels addressed how nonprofits can accelerate drug discovery and new ways to fund biomedical research.
The model has attracted keen interest from the life sciences community. Trevor Mundel, president of the Global Health Division at the Gates Foundation was one of the Spectrum’s keynotes. There was also industry representation from 5AM Ventures, Arch Venture Partners, Vertex, AbbVie and others.
Finding a better financial model could be an existential necessity for Scripps Research and other organizations. With campuses in San Diego, California, and Jupiter, Florida, Scripps is one of the largest and most prestigious research institutes in the world. Unfortunately, decades of discovery have not translated into sustainable economics.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
In 2014, previous CEO Michael Marletta was forced out following an awkward attempt to boost the institute’s financial health by merging with the University of Southern California. Two years later, a $20 million deficit forced Scripps to table construction on a new facility. A year after that, Fitch downgraded the institute’s credit rating from A+ to A.
Given this backdrop, Scripps’ leadership felt the urgent need to bring more money, more consistently, into the system. For Schultz and team, the answer was to advance worthy projects through pre-clinical studies and into early stage trials. The organization hopes moving research farther down the pipeline will generate greater value for their intellectual property and ensure more of their work makes it to the clinic.
“We can make a discovery, make a medicine and move it into patients,” said Schultz. “Then we can partner with pharma.”
Scripps may be uniquely positioned to make this plan work. In 2016, the institute joined forces with the California Institute for Biomedical Research (Calibr), a nonprofit focused on translational research. In addition, the Scripps Research Translational Institute provides expertise on genomics, population health and personalized medicine. Scripps is also establishing a $100 million fund, called PRIMER, to support their pre-clinical and early stage studies.
Perhaps the most novel aspect of the model is that, in addition to funneling proceeds from IP sales back into the research, the institute will reimburse grant makers. Scripps believes these recoverable grants will encourage more investment.
To show the model at work, the Spectrum highlighted several Scripps discoveries in the pipeline. In March 2018, Calibr initiated a phase 1 trial, supported by the California Institute for Regenerative Medicine, to test osteoarthritis drug KA34, a molecule that encourages stem cells to become cartilage-secreting chondrocytes. Calibr is also partnering with AbbVie to advance new CAR-T therapies.
“We’re showing, as a research institute, that we can not only make discoveries but we can actually make and put drugs into patients,” said Schultz. “We create a new funding model for biomedical research institutes, where we capture a greater fraction of the value of the discoveries and the medicines we make.”
This approach appears to borrow a page from the serial biotech entrepreneurs so common in San Diego. Advance a product to the point where pharma and biotech are willing to invest. Sell the IP (or the company). Reinvest in a new idea. Will nonprofit serial entrepreneurship fly? Scripps Research is making a big investment to see that it does.
Photo: Don Boomer
