Getting Your Gates

© DANIJEL MICKA

In the 1980s, Toronto-based Polydex Pharmaceuticals was developing dextran products, including a high-viscosity cellulose-dextran compound intended for developing Polaroid film. The film company, however, eventually chose to use another chemical. Some years later, research showed that dextran-based compounds were an effective contraceptive that also killed the herpes and gonorrhea viruses as well as HIV. Polydex CEO George Usher had a hunch that the cellulose-dextran compound stored in his warehouse might work. Usher tracked down initial funding from a now-defunct nonprofit organization to do animal studies, and the results looked promising.

The company already had the infrastructure and expertise in working with dextran-based products, and the compound had initially been developed as an industrial product, so production costs had been tightly managed. But the company had only $2 million in annual sales and was in no position to fund additional studies. "What part of 'money' don't you understand?" Usher quipped to the scientists who were pestering him to back more testing. The market Polydex was looking at did not spell blockbuster or even a profitable niche, so venture capital funding or a partnership with Big Pharma did not seem a likely route. Government agencies such as the US Agency for International Development (USAID), the Foundation for the National Institutes of Health, and the Canadian and European governments had grants earmarked for potential products that could be distributed cheaply in developing countries to slow the spread of HIV and other sexually transmitted diseases. These programs, however, are subject to the waxing and waning of government funding. Usher saw another way.

Over the past five years, nonprofit funding organizations have greatly increased their presence in drug R&D, says Chris Earl, CEO of BIO Ventures for Global Health (BVGH), a nonprofit organization based in Washington, DC, that creates incentives for drug companies to target diseases of developing countries. BVGH was spun out of the Biotechnology Industry Organization and is supported in part by the Bill and Melinda Gates Foundation and the Rockefeller Foundation. "Some markets are better than you might think, if you have a valuable, affordable drug," he says. "There has been a revolution in the amount of money for the developing world in the past five or ten years." Other organizations similar to BVGH have also emerged that have nonprofit money available to for-profit companies. Taken together, these collaborations are called product development partnerships (PDPs).

Usher teamed up with CONRAD, formerly the Contraceptive Research and Development Program, an Arlington, Va.-based nonprofit dedicated to finding new ways to prevent pregnancy and sexually transmitted infections in developing countries. Its funding comes mainly from the Gates Foundation and USAID. CONRAD is helping Polydex to develop Ushercell, its cellulose-dextran-based microbicidal prophylactic. Ushercell is now in Phase III trials in India and Africa, and CONRAD will have contributed approximately $40 million to its development, trial monitoring, and manufacturing. Without this partnership, Polydex could never have afforded to take its drug to human trials. Moreover, the drug probably would have stalled during drug development, because Polydex had no expertise in human clinical trials. "I could spell FDA, but that's about it," says Usher.

In their agreement, CONRAD allowed Polydex to maintain all commercial and intellectual property rights to Ushercell. In return, Polydex has given a written promise to offer Ushercell to developing countries at a miniscule profit margin. "Usually we try to have a nonexclusive license in the developing world," says CONRAD CEO Henry Gabelnick. "For most of our other products, we do have rights to the intellectual property." But Polydex was clear that maintaining IP rights was a make-or-break issue, and CONRAD was flexible; the deal still ensured developing countries would be protected from soaring prices. CONRAD is also helping Polydex navigate the intricacies of regulatory government agencies, including the FDA and African and Indian government offices.

Other companies have also taken the leap into nonprofit. Amyris Biotechnologies, based in Emeryville, Calif., used an agreement with the nonprofit pharmaceutical company One World Health - via $42.6 million in funding from the Gates Foundation - to develop an antimalarial drug for developing countries. The drug, called artemisinin, is a product of synthetic biology. The company has designed microbes to make the active form of the drug and can scale up production to get hundreds of grams of very pure compound at a fraction of what it costs to laboriously extract the chemical from wormwood, its natural source.

Such a strategy is appealing to nonprofit organizations. "We work with partners to ensure availability and affordability.ﾭ The key is that the end products reach people," says John Wecker, director of immunization solutions at the Program for Appropriate Technology in Health (PATH), a nonprofit based in Seattle. Amyris used the funding to build its drug development platform and improve its technologies - crucial elements in developing artemisinin. The company will see its drug distributed in developing countries, a laudable goal that boosts the morale and focus of an already good place to work, says Jack Newman, director of research at Amyris. The company retains the R&D experience as well as the rights to the technology, and it will use them to create products intended for the US market.

For more information on these charitable organizations, click the links below:

Contraceptive Research and Development Program (CONRAD)
Institute for OneWorld Health
Program for Appropriate Technology in Health (PATH)
Global Alliance for TB Drug Development
Bill and Melinda Gates Foundation