The cancer megafund: a catalyst for disruptive innovation

To the Editor:

In their provocative paper in the October issue of Nature Biotechnology, Andrew Lo and colleagues1 propose a $30-billion cancer megafund that would tap credit markets using securitized R&D projects to raise unprecedented capital for cancer drug development. By financing many projects at once, such a megafund could reduce portfolio risk through diversification, making it attractive to pension funds, insurance companies and other large pools of investment capital. I would like to alert readers to a second benefit arising from the scale of the megafund that wasn't explored but could make the approach even more compelling to investors. This second benefit is the megafund's ability to slash the time, cost and risk of drug development by radically rethinking development processes, business models and organizational structures, and requiring the open sharing of data, knowledge and resources across portfolio projects. The resulting impact on productivity, risk and new therapeutic opportunities could potentially dwarf the returns from financial engineering.

The productivity of large pharmaceutical companies—as measured by the number of new molecular-entity and biologic license applications per dollar of R&D investment—has been in decline for a decade. Lo and colleagues1 attribute this trend largely to the increasing complexity of biomedicine, which has resulted in a proliferation of potential targets and leads, making it harder to predict which ones will ultimately succeed.

But what if the declining productivity trend is a more fundamental paradigm shift precipitated by the genomics 'revolution', together with advances in computational and systems biology that the pharmaceutical industry is still struggling to exploit. The historical statistics used by the authors to validate their financing model would then no longer apply. There is reason to believe this may be the case, particularly in cancer, which, we now realize, comprises hundreds if not thousands of unique molecular diseases. Given the hundreds of new targeted therapies and diagnostics in development and the likelihood that combination therapies will be required in most cases, there simply isn't enough time, money, patients or specimens to sustain the testing of monotherapies on large groups of patients, who are likely to have many different subdiseases. To make the economics work, we need a way to rapidly develop targeted therapies for small subpopulations and repurpose them across many cancers.

Another set of problems, historically the hardest to overcome, involves the many social and structural impediments that slow drug development and prevent patients from obtaining timely and affordable access to the latest therapies2. They include the endless delays in obtaining funding, licensing compounds, transferring data and materials across institutions, recruiting for trials, publishing results, obtaining institutional review board (IRB) and regulatory approvals and qualifying for insurance reimbursement; the misaligned incentives that encourage competition and career advancement over collaboration and cures; and the use of biotech companies to commercialize academic discoveries. Biotechs take time and money to set up; most fail, and they operate in loose alliances of licensing deals that do nothing to promote collaboration and learning3. Many drugs, some of which could be repurposed to treat rare cancers, die on the shelf for economic reasons.

A $30-billion cancer megafund would provide a unique opportunity to address these issues by leveraging its scale and influence to change the rules—imposing new business models and novel approaches to management, corporate governance and scientific collaboration across its portfolio of projects.

First, investment decisions could be improved, in the face of growing complexity, by requiring portfolio projects to share pre-competitive data and predictive models on target validation, preclinical drug testing and clinical trial results. The megafund could mine these data for the best opportunities and then license the data to pharmaceutical companies and other investors.

Second, development times for targeted therapies could be shortened dramatically through the tight integration of research and care around individual patients. In lieu of conducting trials, developers could get early validation by testing new drugs on a handful of patients who have the right mutations and are otherwise out of options. Physicians could share and learn from the thousands of unreported clinical experiments that take place daily in community oncology practices and involve the off-label use of approved drugs alone and in cocktails; scientists can use preclinical experiments on a patient's cell line or xenograft to inform that patient's treatment. The megafund could finance these human 'proof-of-concept' studies and use the results to guide investment decisions, rapidly scaling successful ones into trials and otherwise cutting its losses. Anonymized patient data could be made publicly available in the spirit of Andy Grove's 'e-Trials'4, to facilitate comparison of clinical responses across patients and groups.

Third, development costs could be slashed through investment in an ecosystem of shared services for drug development and personalized oncology. The ecosystem would provide an efficient 'marketplace' for megafund projects to leverage one another's resources as well as those of third parties—from patients, data and specimens to Clinical Laboratory Improvement Amendments (CLIA)-certified molecular diagnostics and preclinical drug screening facilities. Standardizing patient consents, IRB protocols, data and material transfer agreements and the like would eliminate much of the debilitating delays, legal wrangling and technical incompatibilities that frustrate scientific collaboration today. By accelerating the pharmaceutical industry's transition to a horizontally integrated ecosystem of service providers, a megafund could usher in a new age of collaborative drug and therapy development, reducing costs and risks through economies of scale and cross-learning, so that even modestly funded labs could do preclinical development without having to start a biotech.

These innovations are being piloted today in Cancer Commons5, a nonprofit, open science initiative whose mission is to ensure that patients are treated in accord with the latest knowledge on immuno- and targeted therapies and to continually update that knowledge on the basis of each patient's response. The megafund could serve as an agile capital pool, cherry picking the most attractive investment opportunities identified in these 'n of 1' studies. It could thereby leverage the billions invested in cancer research by the government, business and nonprofit sectors, but it would still be frustrated by, for example, traditional rules of academic credit, intellectual property ownership and IRBs that impede deep collaboration. A more radical approach would use some of the fund's capital to fully replace the existing system with a new system of research funding, shared services and rules that tightly integrate research and clinical care, capture all learning and reward collaboration.

Many have argued the need for disruptive innovation in drug development. A cancer megafund offers a unique opportunity to put these thoughts into action. Later this month, Andrew Lo will be organizing a small two-day conference at the Massachusetts Institute of Technology where these and other options will be explored.


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Correspondence to Jay M Tenenbaum.

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Tenenbaum, J. The cancer megafund: a catalyst for disruptive innovation. Nat Biotechnol 31, 491–492 (2013).

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