Staff Writer

In their search for cures, many nonprofit disease foundations are playing the role of investor, funneling research dollars to biotechnology companies. But unlike a venture capital firm, these donor-based patient advocacy groups don't expect a financial return on their "investment" in return for research grants.

The Cystic Fibrosis Foundation for years has funded medical research in the industry and is currently supporting more than 30 potential new treatments being developed by biotech firms and major drugmakers. The Maryland-based foundation says its support was key to the development and FDA approval of four therapies that are now part of the standard treatment regimens for many patients with cystic fibrosis.

Other donor-based disease foundations have a history of mainly supporting medical research at academic institutions. But more recently, some have begun to actively court industry in an effort to further accelerate drug research.

"Our goal is to find the best science, no matter who's doing it," said Katie Hood, chief executive officer of the Michael J. Fox Foundation for Parkinson's Research. "It makes no sense to only have relationships with academics."

Founded in 2000, the Michael J. Fox Foundation has stepped up its outreach to industry in recent years to encourage more grant applications from companies, Hood said. The organization also doubled funding for its therapeutic development initiative to $10 million in the hope that industry will compete for a portion of it. The foundation expects to raise $35 million this year, in line with what it raised in 2007, Hood said.

When Ceregene Inc. was looking to move its neurturin (CER120) gene therapy for Parkinson's disease into the clinic for testing in humans, the small biotechnology company had the resources to design a study based on a few efficacy endpoints recognized by FDA. But Ceregene wanted to go beyond that, to evaluate secondary endpoints and use PET scan neuroimaging as a study measure, requiring the San Diego-based company to come up with more cash. The imaging alone would run tens of thousands of dollars per study patient, said Jeff Ostrove, president and CEO of Ceregene.

Ceregene didn't turn to Wall Street or venture capitalists for the additional funding. Instead, the company applied for a grant from the high-profile nonprofit, The Michael J. Fox Foundation for Parkinson's Research.

The foundation awarded two grants to Ceregene, about $740,000 towards its Phase I study of Neurturin in 2005 and $1.9 million for a Phase II study in 2006. The Phase I results were positive and were recently published in The Lancet Neurology. The Phase II study has completed enrollment and the company expects to announce results in late 2008. If the Phase II results are positive, Ceregene expects to initiate a Phase III trial in 2009.

Without the added support from the foundation, Ostrove said "we could not have done [those studies] as a small private, venture-backed company."

Ceregene also is studying amyotrophic lateral sclerosis (ALS), commonly known as Lou Gehrig's disease. The company has received funding by the ALS Association and the Robert Packard Foundation for various toxicology studies in ALS, Ostrove said.

Ceregene has received a total of about $5 million in funding from nonprofit groups, said Ostrove, who is part of a panel invited to speak on the topic of nonprofit-funded research at a June conference sponsored by the Biotechnology Industry. Hood, of the Michael J. Fox foundation, also is invited to speak on the same panel.

The International AIDS Vaccine Initiative (IAVI) has formed a partnership with more than 40 academic, biotechnology, pharmaceutical, and government institutions to bring six vaccine candidates into human trials in 11 countries, Seth Berkley, IAVI president and CEO, told BioWorld Financial Watch. In addition, the organization has started an "Innovation Fund" for companies, which is supported in part by the Bill & Melinda Gates Foundation.

Launched in 1996, IAVI claims to be the world's first biomedical product development public-private partnership and a model for other such partnerships. Its network of more than 40 academic, biotechnology, pharmaceutical, and government institutions has worked to bring six vaccine candidates into human trials in 11 countries, according to IAVI.

The Epilepsy Therapy Project has been opening its coffers to industry since 2006, said Joyce Cramer, a retired Yale University researcher who now leads the Virginia-based nonprofit. The concept of patient advocacy groups providing funding for industry research is a new and the opportunities are "exceptionally rare," Cramer said.

But while plenty of support is available for academic scientists, Cramer said more could be done to support companies with potential new therapies. Besides giving grants to biotech companies, Cramer's organization has provided seed money to a company and also sought to enter a licensing agreement with another firm that was unable to proceed with the deal.

In many cases, she said, funding from the Epilepsy Therapy Project has become a kind of stamp of approval for investors looking to back a company.

Government also has recognized the potential value of public-private partnerships.

Congress created the Reagan-Udall Foundation which brings together private and independent nonprofit organizations to collaborate on scientific projects. In addition, the Foundation for the National Institutes of Health has public-private partnerships for biomedical initiatives.

Ellen Sigal, chairwoman and founder of Friends of Cancer Research and a board member of the NIH Foundation, said she was a "major fan" of the public-private model for advancing research. "I think it's the new model; I think it's an important model," said Sigal, who is chairwoman of the NIH foundation's public-private partnerships.

Seeking funding through a patient advocacy group can be easier and less costly than a typical financing deal, said Greg Simon, president of Faster Cures, a policy group that has come up with a select list of nonprofits that fund research.

More biotech companies are becoming aware of nonprofit groups that fund industry research, said Simon, who estimated that "scores of them" exist. "The problem isn't lack of opportunities with nonprofits," Simon said.

But he said some biotech companies have the misconception that these groups are not serious scientific organizations. However, both Hood and Cramer emphasized that expert boards review their grant applications.