In my career, I’ve worked in investment banking, as an investor, and for private foundations such as the Bill & Melinda Gates Foundation, where I managed their $2 billion Strategic Investment Fund. I studied molecular biology in school, but after quickly realizing that life in the lab was not for me, I started my career in investment banking. Investment banking provided me with a great business education, but after several years I realized I needed a job with more direct impact. Since then I have always looked for opportunities to combine my love of business and science in a way that will make a real difference in the world. I was so inspired by Variant Bio’s mission, its ethics-first approach, and the potential of its technology, that I decided to join the company as CEO earlier this year.
Variant Bio’s mission is to develop life-saving therapies by studying the genes of diverse populations. Our model is to form partnerships with communities who may have a novel gene variant that could be the key to developing a new drug. We look for people who are outliers for certain traits, which is a proven method for drug discovery and has led to the development of new drugs to lower cholesterol and treat osteoporosis, for example.
With a focus on studying the genes of diverse and outlier populations, our entire business model is predicated on being able to form strong and lasting partnerships with communities around the world. Many communities are, however, wary of forming a partnership with medical researchers, and for very good reasons. Sadly, throughout history, too many researchers have shown up, conducted a study, often with insufficient regard or even blatant disregard for ethics, and then disappeared, without sharing their findings or any other benefits with their partners.
A New Approach
At Variant Bio, our team of geneticists, anthropologists, and ethicists are keenly aware of this history and have developed strategies for how to avoid past mistakes. To have any chance of success in drug development and, most importantly, to help communities around the world thrive, we have to develop a new model for genomic research. Thus, we founded Variant Bio with ethics at the center of everything we do.
When our partners allow us to study their genetic data, they provide us with incredible value, and therefore it is imperative that they share in the benefits of any drugs we develop.
We are committed to treating our partners with respect, to sharing the findings and the financial rewards of our studies with them, and to ensuring that they have access to the data we generate so they can use it to improve health in their communities. When our partners allow us to study their genetic data, they provide us with incredible value, and therefore it is imperative that they share in the benefits of any drugs we develop.
Will Variant Bio Truly Be Different?
Now, so far this is a pretty standard blog post for a company. If you have a cynical side like I do, you’re probably thinking, “Why should I believe Variant Bio will be any different? All companies claim they’re going to do the right thing. None write blog posts about how they’re going to exploit their partners.”
I understand that reaction! Talk is cheap. Every company today has a lofty mission statement. When push comes to shove, ethics too often take a back seat.
The mistakes that other companies have made or continue to make are potentially fatal to our entire mission and business model; if our partners don’t trust us, they won’t partner with us, and if they don’t partner with us, we won’t be able to analyze diverse genomic data to develop life-saving therapeutics. This will not only be bad for the world as we won’t be able to realize the potential of our technology to create life-saving drugs, but Variant Bio’s very survival depends on becoming a trusted partner. How are we to earn trust as a new startup?
The Solution: Aligning Incentives
To solve for this, we’ve borrowed tools from the investment world and used them to align incentives between Variant and its partners. In my former position at the Bill & Melinda Gates Foundation, I was fortunate to lead the Strategic Investment Fund, where we formed partnerships with biotech companies to gain access to their technologies for neglected diseases such as HIV, TB, and malaria. I devoted the past decade of my life working to align incentives between dozens of biotechs and non-profit communities striving to develop cures for infectious diseases. I’m excited to apply this experience toward building long-term partnerships at Variant.
All startup companies face a similar trust issue from the very beginning — first and foremost, they need to gain the trust of investors. But by definition a startup has no track record, so why should they be trusted with an investor’s capital? This is the same issue our potential partners face when considering whether to trust us with their data — we’re asking them to give us something extremely valuable in exchange for a promise to use it wisely and to share the benefits with them in the future. Why should communities trust Variant Bio?
The investment world has tackled this problem by aligning incentives between the company and its investors. Charlie Munger, Warren Buffet’s business partner and one of the most successful investors in history, sums it up with one of my favorite sayings: “Show me the incentive and I will show you the outcome.” Investments in a startup can work if your incentives are aligned with your partner, and you know they’ll be doing everything in their power to get to the same outcome you want. Investors do this by granting shares and options to startup employees. The employees will succeed if the company succeeds; they will fail if the company fails. Thus, their incentives are aligned.
At the Gates Foundation, using equity investment and other investment structures, we designed partnerships where the Foundation and our biotech partners would fail or succeed together in our goal to develop new drugs and vaccines for neglected diseases. This effort succeeded well beyond our expectations, and through these partnerships several life-saving therapeutics were made available at affordable prices to underserved communities in the Global South.
Our Model: Benefit-Sharing and Transparency
At Variant Bio, we are taking these same lessons and applying them to genomic research. Our goal is to align incentives with our partners, so they don’t have to simply trust that we will act in their best interest; they’ll know that we in fact have an incentive to do so. We are doing this in two key ways — through benefit-sharing and transparency.
When embarking on a new project, we first consult with our partners about what is important to their community. This sounds obvious, but it is a step that is all too often neglected.
The most important alignment is through our benefit-sharing program. When embarking on a new project, we first consult with our partners about what is important to their community. This sounds obvious, but it is a step that is all too often neglected. If we don’t understand what is important to our partners, we can’t align incentives with them. We also share what is important to us — the ability to use the data to develop life-saving drugs (but not to sell or use the data for other purposes). Once we establish this mutual understanding, we structure our partnerships so that if we succeed, our partners will succeed at what’s important to them. We do this through an agreement to share a portion of Variant Bio’s revenue and equity value to support all our partners. Our partners know that if Variant Bio generates value, their communities will share in the benefits. If we fail, they won’t. Our incentives are aligned. Simple. Obvious. And yet, amazingly, this basic agreement to understand what is important to both parties and to share the benefits is missing in almost all previous genomic research efforts.
This approach ensures alignment if things go well, but how can we also ensure alignment to avoid bad behavior? The answer is through transparency — with our partners and with an independent ethics advisory board. We are doing this by connecting our past partners, current partners, future potential partners, and ethics advisory board to form a community interested in genomic studies. How does this align incentives with our partners? Variant Bio’s business is dependent on conducting genomic studies over time, so our model only works if communities continue to agree to partner with us, which they will only do if they know that we’ve been great partners in the past. Transparency and an independent board creates a very strong additional incentive for Variant to act ethically and abide by our agreements over the long term. Not only because it’s the right thing to do, but because continuing to be recognized as the best possible partner for genetic studies is critical to the long-term success of the company.
An Invitation to Partner
If you are interested in partnering with Variant Bio on a genomic drug discovery study, we invite you to put us to the test. Do due diligence as if you were an investor in the company. Talk to our past partners. Talk to our independent ethics advisors.
If you are interested in partnering with Variant Bio on a genomic drug discovery study, we invite you to put us to the test. Do due diligence as if you were an investor in the company.
Start a discussion with us on what’s important to you, so we can work to structure an agreement to share the benefits of the research in meaningful ways, and ensure that our incentives are aligned so we can succeed together.