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Reeve Foundation to invest in paralysis-treatment companies

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    Reeve Foundation to invest in paralysis-treatment companies

    Nonprofits seeking to advance medical research have long operated from a standard playbook, soliciting grant proposals from academic scientists and then funding the most promising ones.
    But, increasingly, medical philanthropies are going the way of venture capitalist firms by making equity investments in therapeutics companies. The latest example? The Christopher & Dana Reeve Foundation, which announced Tuesday that it wants to raise a $50 million fund to start investing in companies working on treatments for spinal-cord injuries.

    The goal of the new venture philanthropy model is to more quickly help patients like the late actor Christopher Reeve, for whom the nonprofit is named, but it also comes with plenty of risk in a field of research that?s seen far more disappointments than successes.
    The Reeve Foundation aims to raise its new investment fund within the next 18 to 24 months; it expects much of the initial funding to come from individuals and families with a personal connection to spinal-cord injury, according to the foundation?s president and CEO, Peter Wilderotter. (Reeve embraced patient advocacy after a horseback-riding injury that left his own arms and legs paralyzed.)

    Once the fund is up and running, the foundation will look to take stakes in existing companies or help jump-start new ones working on several approaches to treating spinal-cord injuries: electrical stimulation of the spinal cord through techniques known as neuromodulation and epidural stimulation; technologies that use artificial intelligence and robotics; and stem-cell treatments and other experimental types of regenerative medicine.

    To lead the new investment effort, the foundation hired its first-ever chief scientific officer, the biotech entrepreneur Ethan Perlstein. Perlstein was previously CEO of Perlara, a South San Francisco biotech startup that worked closely with rare disease patient advocacy groups. Those groups committed funding to the company?s research projects ? which were designed to produce an experimental drug ready for clinical trials ? but Perlara couldn?t make the
    finances work, and it shut down this past winter.

    Perlstein, as a result, is well-acquainted with how risky the business of biotech startups can be. Asked about his new gig making bets in a commercial field with a long history of failures, Perlstein said he sees risk as inescapable. ?There?s risk in grant making. There?s risk in [putting out requests for proposals]. There?s risk in doing nothing. There?s risks in not doing translational work,? he said. ?You can?t eradicate it, but you can manage it, and you can de-risk it, so I think that?s just part of the job.?

    There?s also potential for big reward. The Cystic Fibrosis Foundation famously spent years pioneering a venture philanthropy model that involved funding the drug maker Vertex?s quest to develop treatments for the disease; in 2015, it cashed out its royalty rights to Vertex?s drug Kalydeco for $3.3 billion.

    Then there?s the big type 1 diabetes foundation JDRF, which in 2017 launched a fundto invest in companies developing treatments for the disease. One of
    its investments was Semma Therapeutics, which is working on turning stem cells into insulin factories. Just this month, Vertex (VRTX) acquired Semma
    in a $950 million deal that JDRF saidwould bring it a ?significant return on its investment? that it would plow back into more investments. (Sean Doherty, the executive chair of JDRF?s investment fund, told STAT he couldn?t disclose the size of the return on the Semma deal.)

    The Reeve Foundation, for its part, has only once before invested in a company. That was a few years ago, when it invested about $3 million in Southern California-based NeuroRecovery Technologies, which is working on neuromodulation technologies.

    Wilderotter said the goal is to make many more investments like that one. He said that he and the foundation?s leaders decided to transform their model after studying the impact of other nonprofits, most notably the Cystic Fibrosis Foundation, that have turned to venture philanthropy. They were moved, too, he said, by a sense that only funding early stage academic research didn?t do enough to advance Christopher Reeve?s fierce advocacy on behalf of people with spinal-cord injuries.

    ?We felt we needed to change our approach,? Wilderotter said. While the foundation will continue to fund basic research as well as care for people living with spinal-cord injuries, investing in companies working on potential cures ?is our priority,? he said.

    The Reeve Foundation has poured about $140 million into basic research, mainly funding scientists at universities and nonprofit research institutions, since 1982. (It was founded then, long before Christopher Reeve got involved, under a different name.) Most of that funding has been doled out since Reeve, who was paralyzed in 1995, lent his celebrity to create the foundation at the turn of the millennium. He died at age 52 in 2004 of complications from a bed sore, and his widow, the actress and singer Dana Reeve, died at age 44 in 2006 after being diagnosed with lung cancer.

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