We have written extensively about VitaDAO, a collective dedicated to community-governed, decentralized drug development. Probably the fastest and cheapest way to get geroprotective drugs to the market is by repurposing existing drugs, such as rapamycin, metformin, and acarbose. These drugs cost next to nothing, have a known safety record, and have shown a lot of promise in animal models and/or in human population studies. Unfortunately, pharma companies are not interested in this avenue since those old drugs cannot be patented and sold at a high price. This is why VitaDAO has partnered with LEAF to support Dr. Brad Stanfield’s rapamycin + exercise trial.
While communities like VitaDAO can be effective in crowdfunding and facilitating research, money from big players might still be essential to launch even a repurposed drug. To solve this problem, VitaDAO joined forces with Crowd Funded Cures, an initiative of the Medical Prize Charitable Trust, a non-profit founded by Savva Kerdemelidis.
The idea is to use a flexible prize fund, a type of “pay for success” (PFS) contract, to finance large clinical trials. Simply speaking, an organization, such as a big insurance company or a government agency, promises to pay a sum of money in the event of the success of the clinical trial. This lowers the risk enough to make it palatable for potential investors.
We asked Savva Kerdemelidis a few questions for a deeper dive into the world of DAOs, PFS contracts, and intellectual property on the blockchain.
Tell us briefly about your project Crowd Funded Cures and its partnership with VitaDAO, the rationale, goals, and structure of both organizations, and what has been achieved since their inception.
Crowd Funded Cures is the initiative of the Medical Prize Charitable Trust, the NZ-registered non-profit that I established in 2013 to execute the idea set out in my Masters of Law thesis to use flexible prizes to incentivize the development of unmonopolizable therapies. The impetus for doing the Masters and setting up the charity was that I had noticed that many otherwise viable medical treatments lack a business model under the patent system. These “financial orphans” could be cures for many diseases and save millions of lives and trillions of dollars in healthcare costs.
However, they suffer from a market failure or “tragedy of the commons” because patents cannot be leveraged to enforce a monopoly price, which is necessary to recover the cost of R&D, i.e., of the expensive clinical trials needed for regulatory approval. The main categories of such unmonopolizable therapies include finding new uses for off-patent or generic drugs, dietary supplements, diets, and lifestyle interventions.
The goal of Crowd Funded Cures was to help fix this market failure by raising a pilot flexible prize fund to incentivise an unmonopolizable therapy to treat Crohn’s disease (e.g. low-dose naltrexone or semi-vegetarian diet), which my fiancée at the time was diagnosed with. However, my life and career as a legal consultant and patent attorney intervened, and the project lost steam.
More recently, there has been a perfect storm, with COVID highlighting the opportunity for generic drug repurposing and the public harm due to lack of private incentives to conduct clinical trials (as an example, using low-cost off-patent fluvoxamine to treat COVID-19 vs expensive patented molnupiravir). Web3 and blockchain have also shown how certain projects can raise hundreds of millions of dollars in seconds.
There has been renewed interest in how Web3 and DAOs can help solve global coordination problems and the use of financial innovation to align private incentives with funding public goods. Also, an aging baby boomer population, Eroom’s law, escalating healthcare costs, big data, and cheap DNA testing, wearables, and diagnostics all show that new incentive models must be leveraged if medical innovation is to reach its full potential in this century.
In early 2020 after COVID hit, I was motivated to put more energy into Crowd Funded Cures. Our partnerships advisor Spiro reached out to the leading Web3 DeSci project, VitaDAO, in mid-2021, and we found a lot of synergies with their community – mostly scientists who were also frustrated at the financial bottlenecks for science funding in the “valley of death” for early-stage biopharma research.
As a solution, they proposed the use of IP-NFTs [intellectual property non-fungible tokens], using Molecule.to’s platform, established by Paul Kohlhaas and Tyler Golato. VitaDAO had just raised over $5 million in a token sale to fund longevity research. In less than one year, the 5000-plus-member VitaDAO community has evaluated over 60 research proposals and deployed approximately $2 million dollars in funding – a monumental achievement.
This includes $40 thousand for Crowd Funded Cures to conduct a Generic Drug Repurposing PFS Feasibility Study and $50 thousand to support a pilot IP-NFT x Pay-for-Success contract to fund a Phase 2a rapamycin + exercise study by Dr. Brad Stanfield, a New Zealand doctor and longevity researcher. Crowd Funded Cures has also grown over the past few months to over 100+ members in its Discord, and 10 volunteers. We also plan to conduct a token sale to launch a DAO this year.
PFS (Pay-for-Success) seems like a great idea. Could you please explain how the PFS/IP-NFT framework works?
A Pay-for-Success (PFS) contract is essentially a kind of conditional grant or prize, whereby a payment is made upon fulfilment of certain criteria. Other names used by think tanks such as the Oxford Government Outcomes Lab are outcomes-based financing or Social Impact Bonds (SIBs). The idea is that if the government wishes to incentivize private industry to deliver public goods or services (such as reducing prisoner recidivism or homelessness), they can back a PFS contract and reward certain outcomes (e.g. $10 thousand for keeping a prisoner out of jail for one year after release or putting a homeless person into a home and employment within one year).
SIBs are a relatively new phenomenon, with the first established in 2012 in the UK to reduce prisoner recidivism, but now with over $700m raised globally. Dr. Bruce Bloom of the generic drug repurposing charity Cures Within Reach had the idea to use SIBs to repurpose generic drugs in 2015 [Dr. Bloom left Cures Within Reach in 2019], and helped bring the idea to the NHS with a UK rare disease charity (Findacure UK, renamed as Beacon). Unfortunately, this did not obtain backing from the UK government. Crowd Funded Cures’ mission is to continue this important work and obtain private and public backing for generic drug repurposing PFS contracts.
So, IP-NFTs are a framework established by Molecule.to. It allows fractionalized ownership of IP which can be traded on the crypto markets and benefit from the increased liquidity provided. The other advantage of allowing fractionalization and distributed ownership is greater consistency with open source and consumer co-op business models (e.g., if a drug is owned by patients, then they are less likely to be subject to exploitative pricing).
A PFS contract can be combined with the IP-NFT framework to allow investors to fund unmonopolizable therapies such as repurposing generic drugs. This would otherwise be a non-viable investment for VCs because it would not be possible to enforce a monopoly price (unless the generic drug can be patented as a reformulation, which is not always possible). For example, instead of earning ROI via patent royalties and monopoly pricing, the rewards for the IP-NFT investors are provided by payers backing the PFS contract, upon publication of clinical trial data encrypted in the IP-NFT showing the repurposing of a generic drug to successfully achieve a clinical outcome.
The payers will benefit from the development of a new treatment protocol that can improve patient health and reduce healthcare costs. In essence, a PFS contract allows the payers (which could be a syndicate of public and private health insurers) to put a price on an off-patent treatment protocol in advance. This creates a business model for funding open-source medicines, which would outcompete new patented medicines.
Why would any specific insurance company choose to be the one to shell out the money, if all the insurers would equally benefit from the success?
There is indeed a free-rider problem to the extent that other payers, such as private health insurers, can benefit from the knowledge of new successful treatment protocols without having paid for them. However, there are some first-mover advantages. For example, under a PFS contract, a payer may get exclusive access to the “branded” repurposed generic that has obtained regulatory approval. Other payers would be forced to use the drug off-label, which doctors may be reluctant to prescribe due to increased risk of liability and/or lack of insurance coverage.
There will also be the PR value of helping develop a low-cost open-source medicine, which would have a massive positive impact on public health globally. Payers can have access to the raw clinical trial data encrypted in an IP-NFT, which may be useful to help develop new medicines and/or contain other commercially valuable information. Let’s not forget that large government single-payers such as the NHS and philanthropies that directly fund clinical trials should not have this concern.
What is the relationship between VitaDAO, the Longevity Prize, Crowd Funded Cures and Dr. Stanfield’s rapamycin study? How will you raise funds for the prize, and have you had contacts with insurers?
VitaDAO submitted an application for funding on Gitcoin for a Longevity Prize, which was one of the highest-funded projects, with over $190 thousand raised to date. The goal of the Longevity Prize is to issue smaller prizes to incentivize longevity research. They also intend to set aside $100 thousand for a generic drug repurposing Longevity Prize to support an IP-NFT x PFS pilot with Crowd Funded Cures. We have identified Dr Brad Stanfield’s $400 thousand Phase 2a RCT (randomized controlled trial) for rapamycin + exercise as a case study to apply the PFS model. In essence, having a generic drug repurposing Longevity Prize in place will create a commercial business case for VitaDAO to invest in an RCT for an off-patent therapy via an IP-NFT.
Dr. Stanfield is highly supportive of the PFS model because it has been extremely difficult for him to raise the funds via philanthropic means (despite having 100k subscribers on his YouTube channel and support of Lifespan.io). This is a common theme for many charities trying to raise money for clinical trials – finding philanthropic donors is hard. However, with a PFS contract, the “donors” are actually pre-purchasing successful clinical trial data. This is similar to crowdfunding platforms such as Kickstarter, which is effectively a pre-sale.
For Dr. Stanfield’s RCT, the purchased data would be a novel and successful treatment protocol combining exercise three times a week (with a standardized exercise bike) with an intermittent weekly dose of rapamycin when not exercising, that results in a successful primary clinical outcome, i.e. trend towards improvement in the 30-second chair stand test, which is a standard test for strength in the elderly and is strongly correlated with healthy longevity.
We are hoping that with a PFS model and by engaging with the longevity and crypto community, it will be possible to raise a $1 million payer fund. This will allow VitaDAO to fund the entire Phase 2a via an IP-NFT that will be eligible to receive an outcome payment from the payer fund if the primary clinical outcome is met.
In the event that the RCT is not successful, the payer fund can be used to incentivise other generic drug repurposing research (perhaps a different treatment protocol/dosing regimen for rapamycin or another generic drug like metformin, resveratrol, NMN, or NR). This would be a world first and help validate the business model for a PFS contract to incentivize the development of off-patent/open-source medicines, which also transfers risk from payers/donors to investors.
Crowd Funded Cures has had contacts with various payers over the last couple of years, including PHARMAC (NZ government single payer), BARDA (US government agency), NCATS (NIH generic drug repurposing institute), and various philanthropies, including LifeArc (large UK charity), Wellcome Trust, Chan Zuckerberg Initiative, and others. However, these bureaucratic organizations will likely be slow to back a PFS contract.
It is hoped that with our feasibility study, we can show the financial and business case to do so on the basis of overall cost savings/health impact exceeding the costs of outcome payments/payer fund. It is noted that even if the payer fund/prize is too small to incentivize investors to front the money for the clinical trials, it will be possible to create a hybrid PFS model with part of the money funded by investors and the rest funded by philanthropy to increase investor ROI.
What is the importance of this particular study?
Rapamycin is the only drug that have been shown to reproducibly extend lifespan both in male and female mice, according to the Interventions Testing Program. Exercise has also been shown to reduce the age-associated decline in strength. However, the muscle-building enzyme mTOR, target of rapamycin, is also overexpressed in the elderly, but paradoxically, does not lead to improved strength.
Rapamycin downregulates mTOR, and for this reason, Dr. Stanfield had proposed combining exercise during the week with a single intermittent dose on the weekend when the patient is not exercising, with the hypothesis that it could restore mTOR balance and improve muscle performance. The RCT is also small to test whether this approach is safe and won’t cause any adverse effects before scaling to a larger RCT.
This kind of experimentation to “de-risk” optimal dosing regimens is perfectly suited for a PFS or prize-like incentive which does not rely on selling as many drugs as possible to maximize profits, as with the current patent-centric incentive model relied on by the biotech industry. For that reason, we are excited about the opportunity for the PFS model to help researchers to get private funding for their new and innovative ideas even with a weak patent position, which could have a massive impact on longevity and global health generally.
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