Meet “Molecule” – the Pharma Development Disruptor

Blockchain technology in the pharma industry is commonly associated with supply chain management, but the technology can be used in other ways to benefit drug developers. At my not-for-profit company, Molecule, we have developed a platform using blockchain technology to create a more collaborative approach for drug development. I like to describe Molecule as a platform that offers an open market for intellectual property, where researchers, companies or investors can acquire shares in a molecule and/or work on the molecule to contribute to its development.

Learning from the software giants

The Molecule platform was born in 2018. The idea was to align all the stakeholders of the drug development pathway – including the academic institutes and small biotechs that provide intellectual property and groundbreaking research, pharmaceutical companies, consumers, investors, or even regulators – in a more collaborative-based marketplace for drug development.

The approach is deliberately open source – the same kind of system that is used in the development of software (particularly for computer operating systems). Open source has had an impact on the relative speed and cost with which new software is introduced to the market, and many of the software giants today have moved into the open source community; the Microsoft loves Linux mantra, IBM’s acquisition of Red Hat, Oracle cultivating the open source Java platform and language, are just some examples. Open source helps to reduce the costs of developing new software. Consider Microsoft as an example; in the early 1990s, Microsoft was developing software in house, using only Microsoft resources. Development costs were significantly higher than the actual cost required to manufacture the software discs, and the development costs were passed on to the consumer which, along with the fear of the growing global dominance of Microsoft, led to the establishment of Linux, which offered free, open source software that would run on personal computers.

Let’s compare this to the pharmaceutical industry. The development of a new prescription medicine is estimated to cost around $2.6 billion. Manufacturing costs are generally only a small percentage of the overall cost of development, so the high costs of medicines handed to the patient or through reimbursement are a reflection of the development costs (and failures along the way) – just like Microsoft software in the 1990s. Moreover, just as Microsoft used to do all of its development in house, the pharma industry also keeps its R&D in house and behind closed doors.

The open market

For pharmaceutical companies, patents are very important, but have ultimately instilled a culture of secrecy. Many companies fund entire R&D empires to ensure all data captured (good and bad) is retained in-house and kept as private property. This lack of open dissemination of experimental results ultimately stymies the advancement of the processes and sciences fundamental to R&D. Negative results aren’t published so mistakes and failures are reproduced across the industry, contributing to the escalating costs of development across the industry.

A patent allows one company to monetize all of the future commercial profits that could be derived from a new drug – and anyone else trying to research that drug could be sued. As development of a product proceeds, more money is spent, but as milestones are passed, the likelihood of success increases. This adds value, progressively, to the patent and is often the basis for growth in the enterprise value of a biotech company as it continually raises and spends investor money to develop an asset. With Molecule, we take the original patent, ideally at the very early stages of its life, break up its ownership into saleable units and offer them on a market to create a new commodity that people can invest in – and which can fluctuate like any stock or share. Moreover, we now have something that promotes openness and transparency in drug development as any “news” or new research findings will impact the value of the patent and the value of the individual units.

The incentive model described above will be familiar to investors, but for pharmaceutical R&D it’s important to not only tap into finance, but also scientific expertise. By purchasing some shares in a patent, a researcher would have part ownership of a molecule, which may, in the future, bring financial reward but immediately gives the researcher access to data and the right to work on the molecule and publish the results openly, as an academic researcher would. This additional research brings “news” to the shareholders, possibly affects the pricing, and, importantly, shares any and all data openly with the world. Now we have pharmaceutical development out in the open and free!

There are many experimental drugs at various stages of development, from concept to clinical trial, and further progress is dependent upon priorities set currently by industry – time to market, market size, efficiency, cost of investment, resources, and so on. In our new marketplace, a patient can see what is in the pipeline and back the programs they wish to support – perhaps to help bring a new specific type or category of drug to the market – as opposed to buying shares in a pharma company that can choose at any point to drop the program. Ownership and a direct connection will inevitably help drive a patent forward.

In providing an open platform for all, we should see patents, programs and drugs supported by a wider variety of people, institutions and perhaps even patient support groups at different stages of the development and commercialization process. Such a platform will foster better collaboration, openness and a different culture alongside new incentives and an alternate method of financing.

On Molecule, raising financing for the development of an asset works in a similar fashion as raising financing for a company. An IP asset, or bundle, is fractionalized into shares and then distributed between multiple parties in exchange for funding or work on the compound. This can go through several rounds of financing until the market is fully opened, or can be opened early on. The mechanics of how much financing is raised, retained in the market and distributed is highly dependent on the specific use case and stage of the assets development.

Disruptive ambition

In launching any ambitious project, it is better to start focused and branch out as the initial momentum takes you forward. For Molecule, we are beginning by marketing this service to a select number of disease areas where we feel our approach offers a distinct advantage. 
We decided to focus on a few key areas of research with our launch. These are:

• psychedelic studies
• aging and longevity
• rare and neglected disease

These are areas where there have been exciting developments recently, but  there is a need for funding. These are also areas that we feel would directly benefit from broadly-owned IP to prevent monopolization by a single company. We have a handful of projects from these core areas of focus that are extremely exciting, and we cannot wait to announce them! They will launch in series shortly after the first project is live.

The second project we will be launching deals directly with the search for a molecule that could have a positive impact on longevity and healthspan (as well as lifespan). A lot of exciting preliminary work has been performed already, and we believe the broader biogerontology and longevity communities will be excited to hear about the project. Interestingly, there is a lot of crossover between the crypto, psychedelics, and longevity spaces. We hope to work to increase the cross-pollination of ideas in these areas with Molecule. 

The rare and neglected disease spaces are always in need of funding. We believe we can help assist in areas where strong commercial interests don’t exist by creating models for therapeutics for rare and neglected diseases. We are also putting a strong focus on early stage IP from small to mid-sized biotech companies, with the aim of attracting funding for particular programs rather than having to raise company-wide equity finance. However, we also don’t want to forget universities, particularly those wishing to adopt open innovation culture, where IP is continually being generated and in need of progressing. Here, there is a wealth of opportunity for early stage IP, collaboration and commercialization – and our approach gives universities an alternative to either forming a traditional spin off or licensing technology early, which can result in lost research access and future revenues.

Molecule will be going live soon. We have a number of companies in the process of subscribing, and a pipeline of early adopters through our soft launch. During development, we’ve done a lot of research into the legal aspects of patent ownership. Patent law is very complex and constantly evolving – and we still have questions to answer – but given that Molecule is about transparency, there will be clarity for all shareholders. 
For the time being in phase one of our project rollout, we are not working with patents in our initial alpha, and will slowly begin working with patents and IP once we enter into our beta. Initially, we are focusing solely on the development of our tech stack and looking at what kind of activities we can coordinate without IP playing a role. As some of these technologies are relatively new and untested, we want to understand how they can be used in a meaningful way before beginning to work with high risk asset classes. 

We will introduce patents onto our system slowly and carefully, as this is a complex space and we want to ensure that we can distribute ownership in IP across jurisdictions without creating too many issues or encountering road blocks. However, there is still a lot of work to be done. This is where high quality legal guidance and leadership becomes extremely important. 

Due diligence is also an important part of the evaluation process of a project for us. We use a 100-point rubric grading metric for the early analysis of the viability of specific projects we look at conducted by our Scientific Lead, followed up by an evaluation from the broader team, which includes external experts from a variety of backgrounds.Projects must meet some key criteria, such as the raise amount, the project being able to be carried out in multiple phases, and providing sufficient background evidence to support their thinking and hypothesis. We are refining this process as we dig deeper and engage more with researchers to understand their specific needs. 

We realise that the success of our early projects is going to be instrumental, and thus have been working to develop evaluation criteria to be able to determine the likelihood that a project will be successful in achieving its core goals.

Culture shock

The biggest fundamental challenge of this model will be bringing about the culture change required for people to comfortably adopt open innovation in its full sense. Can drug development data be made truly open and accessible? What impact will this have on the perceived value of the time-honored hidden data culture, know-how or even trade secrets? We need to promote the benefits of the system, the accessibility, knowledge-sharing, and even go as far as reminding people the value of sharing negative data. If we can prove that our model works for collaboration, accelerating discovery and, perhaps most importantly, economic reasons (in terms of both access to working capital and eventual up-side returns), we anticipate broad adoption.

I hope our model will become disruptive to the current pharmaceutical culture. We are intentionally exposing the scientific research that underpins new medicines, making this accessible, and providing a space that is easy to interact with and that gives everyone a chance to become involved. The platform may, one day, devalue our current reliance on patent-centric systems, but we hope we will allow a better approach to open innovation and collaboration, both reducing the cost and time it takes to bring new drugs to the patients who so desperately need them.