Alzheimer’s: what if drug companies were owned by the millions waiting for a cure?

Bill Gates’ venture philanthropy for Alzheimer’s is trailblazing — with Common Need Investment the rest of us can do our part to fix a broken system and power the search for a cure.

By Max Tokarsky

Bill Gates’ recent commitment to help establish the Alzheimer’s Diagnostic Accelerator at the Alzheimer’s Drug Discovery Foundation (ADDF), is trailblazing in many ways. Much has been written on the strategic choice to focus on diagnostics as a foundation for future breakthroughs. Not to be overlooked is the significance of structuring the $30 million partnership between Gates, Leonard Lauder, the Dolby family and the Charles and Helen Schwab Foundation as a form of venture philanthropy. A strategic charitable model which Dr. Howard Fillit, the Founding Executive Director and Chief Science Officer of ADDF, has fine-tuned to great effect.

What is venture philanthropy, you may ask?

Venture philanthropy combines the power of purpose-driven charity on one end, with the efficiency of profit-driven enterprise on the other. The way this works is that a donation is made to a charity, in this case, ADDF, which in turn invests those funds in research conducted by for-profit drug companies. If the company benefiting from the investment makes a profit, those profits go back to the charity, to be used to further its mission. It’s a gift, which keeps on giving, with a potential impact well beyond the original amount donated.

Why use donations to fund a for-profit drug company?

As a society, we depend on profit-driven drug companies to take scientific breakthroughs and develop them into life-saving cures. While governments and charities do a fine job in funding scientific research at university and government labs, once a discovery is made these institutions are not well suited to develop those breakthroughs into medicines which can be manufactured and sold to consumers. It is left up to profit-driven companies to invest the vast sums needed for drug development and clinical trials to turn those scientific discoveries into lifesaving medications.

The problem is that, while in simpler times, this system worked reasonably well, but as we began to tackle complex diseases like Alzheimer’s, the business model for turning science into cure has steadily eroded. The scientific breakthrough, which seems so promising in the lab, does not reliably turn into a lifesaving medication that companies can sell to pay back investors. A single promising drug can cost tens of millions to develop and test before anyone can reliably predict whether it will work in the real world. Due to the high cost and risk of this transitional investment, big pharmaceuticals like Pfizer and Merck are scaling back their Alzheimer’s research and development (R&D) labs, and smaller scientist led companies are left struggling. So while each year researchers publish more and more papers on discoveries with potential for treating and curing Alzheimer’s, few of them are picked up by drug companies for development.

This is one of the problems venture philanthropy is attempting to address. By providing smaller scientist led companies with needed investment at an early stage, the hope is to move the process along until it is sufficiently de-risked for profit motivated investors to take over.

All this makes for an efficient use of charitable funds and the work of ADDF and philanthropists like Bill Gates is brilliantly strategic. However, as important and generous the efforts of wealthy donors like Bill Gates are, the underlying problem is much too vast for them to solve alone.

A single early stage clinical trial can cost $10 or $20 million and hundreds of trials are needed if we are to explore every path to a cure.

As a society, we need to rethink the very idea of how we invest in drug discovery, and Common Need Investment may offer a surprisingly simple way for all of us to make a game-changing impact.

This problem impacts all of us in the deepest possible way.

If we live to old age, about half of us will develop Alzheimer’s. This devastating and deadly disease slowly destroys the brain, robbing us of our memories, identity, and ability to eat, talk and walk. Yet, there is a consensus among leading scientists that a cure is possible.

One spectacular example is the work of Dr. Daniel Alkon with Bryostatin. This drug shows promise in restoring neural connections, helping some patients with late-stage Alzheimer’s access old memories once thought to be lost forever and to acquire new ones. The work is in its early clinical stages, much more testing and investment are needed, but the observed clinical improvement offers a tantalizing glimpse of possibilities for the future

A day when Alzheimer’s will be cured will come, how soon that day will be could easily become a life and death question for most all of us.

How much is the current financial bottleneck delaying the discovery of a potential cure?

No one can predict the future, but few are better at estimating probability than Andrew Lo, the director of the Laboratory for Financial Engineering at MIT. His comprehensive study on portfolio modeling for Alzheimer’s drug discovery identified 64 known targets for Alzheimer’s drug discovery. According to the study, each of these research targets has about a 5% probability of success, so pursued one at a time ‘the wait time for the next approved Alzheimer’s drug is 260 years.’ In the current investment climate, only a handful of these targets are being investigated in clinical trials, and that still pushes off the statistical probability of a cure well beyond the lifetimes of even our children. If however, sufficient investment was somehow made possible for all the available research targets to be pursued simultaneously, regardless of potential profit, the overwhelming probability is that an effective drug would be developed and approved in the next 10 to 15 years and perhaps even sooner.

The power of Common Need Investment.

The term Common Need Investment (CNI) refers to investments made in a company based on it’s pursuit of essential work valued by the investors above financial profit or loss.

Imagine if a giant asteroid was about to hit earth. Let’s assume that for whatever reasons solutions offered by NASA and the various governments were not very reassuring. However, intrepid entrepreneurs around the world launched rocket companies, and while not offering a foolproof plan, based on best available evidence, the success of one of them was our best chance for destroying the asteroid and saving our lives.

Now luckily investing in these companies would have a side benefit. If all that rocket innovation succeeds in saving our lives, then, apocalypse averted, companies could possibly use that innovation to develop products to be sold to consumers — space tourism and such. As a result, we may have a small chance of recouping some or all of our investment or maybe even making a profit.

However, wouldn’t it make sense for all of us to invest in these companies based on our need for them to save our lives regardless of the probability of financial profit or loss?

While no giant asteroid is about to hit earth, we do need Alzheimer’s to be cured to save our lives and the lives of our loved ones. So, why not invest in scientist led companies working on a cure based on our existential need for that cure, regardless of the probabilities of financial profit or loss?

We don’t mean to suggest using your retirement savings or your kid’s college fund for that investment. Most of us are not wealthy philanthropists like Bill Gates and can’t afford to invest funds we need for our future. However, what if we just invested a small amount, say, just our spare change? Most of us can afford that and the good news is that there are millions of us. If we all invested our spare change in companies working on a cure for Alzheimer’s, it would add up to billions in vital investment, enabling countless new paths to a cure to be explored. That is the idea of Common Need Investment.

What is the difference between venture philanthropy and Common Need Investment?

Unlike venture philanthropy, where funds are donated to a charity, which in turn invests in companies, in the Common Need Investment model each spare change investor directly owns shares in companies they invest in. If successfully implemented, this also has the advantage of ensuring that drug companies are owned by millions of spare change investors committed to a cure. So together, we could hold companies accountable to make finding a cure their number one priority, while at the same time, as is only fair, retain a chance to make back our investment, should a cure be found.

This is the premise behind the spare change investment platform we are building at InvestAcure.

The mechanics of the model are similar to other online SEC-registered Investment Advisers (RIAs), such as Stash and Acorns. Users download an app, set up an online investment account and give the InvestAcure RIA permission to purchase stock on their behalf. They then connect the credit cards they use for day-to-day transactions. Now, every time they spend money, the system automatically rounds out their transaction to the nearest dollar and deposits the spare change in their investment account. Guided by a panel of leading scientists, InvestAcure then invests those funds in companies spearheading research.

While spare change doesn’t seem like a lot, automatically rounding up one’s transactions adds up to about $50 per month on average. Twenty-six percent or 70 million adults in the U.S. alone have a relative with Alzheimer’s. If just 1.5 percent become spare change investors, that’s $600 million annually — $3 billion over five years. That would have 30X the impact of Bill Gates’ $100 million recent commitment to Alzheimer’s research. At a 15 percent participation rate, the number jumps to $6 billion annually or a staggering $30 billion over five years! That’s enough for countless clinical trials and a reasonable chance for a cure.

By creating this large community of spare change investors, who are motivated by the search for a cure rather than profit, we would transition investment leadership from a narrow group of high-risk profit-motivated investors to a much larger and stable investment base, enabling science driven investment decisions. The more promising paths to a cure can be tested with clinical trials, the better the odds we will find a cure sooner.

In the words of Dr. George Perry, a world-renowned Alzheimer’s scientist and editor of the Journal of Alzheimer’s Disease, who has recently joined the InvestAcure board, ‘InvestAcure has developed a formidable plan to end the roadblock imposed by insufficient capital to fund clinical trials necessary to discover effective cures for Alzheimer Disease. With so many major pharmaceutical companies leaving the space, it is even more imperative that we activate this approach immediately if we are to bring cures to families.’

We founded InvestAcure because it just seems utterly absurd that millions of people should die helplessly just because no one can make a profit developing a cure. The idea of investing spare change for our common need to see Alzheimer's cured made sense to us as a fair and viable solution to ensure that every path to a cure is explored. We believe this could save tens of millions lives, maybe even your’s and our own. If you happen to agree, please reach out, changing the world ain’t easy and we could sure use your help.

Max Tokarsky is the Founder & CEO of InvestAcure, a FinTech Public Benefit Corporation startup based in New York. He can be reached at mtokarsky@investacure.com