Alzheimer’s: The Shocking Truth About The Search for A Cure
Wall Street Math Behind Pfizer’s Decision and A Bold Initiative To Ensure A Cure In Time
by Max Tokarsky
Today at the office, we were calculating the Alzheimer’s death toll worldwide and figured out that every 38 seconds another life is claimed. With Pfizer following other Big Pharma in downsizing or closing their Alzheimer’s research divisions, it is clear that due to the high cost and unpredictable nature of clinical stage research, the investment business model for Alzheimer’s drug discovery is simply broken.
Many drugs have shown potential in restoring brain connections and memory, and leading scientists believe that Alzheimer’s can be cured. Yet, with scarce investment in clinical trials, progress has stalled and countless millions may perish as a result.
In their thought-provoking article in the prominent blog, The Hill, founding members of the Global CEO Initiative on Alzheimer’s Disease; Andy Sieg and George Vradenburg write that according to a September 2014 study from Merrill Lynch and Age Wave, more Americans fear the specter of Alzheimer’s than cancer, stroke or any other debilitating condition combined. They go on to raise the alarm, that before Baby Boomers reach their 70s, generating a massive wave of new Alzheimer’s patients, we need a dramatically new approach to the way we fund research and development of new medicines and therapies for the disease. Within ten years, the government estimates that more than $2 trillion will be spent on care for those with Alzheimer’s, having a massive impact on the economy.
Dr. Hugo Geerts, who formerly headed Alzheimer’s drug discovery at Johnson & Johnson Belgium and who has now joined our Scientific Board at InvestAcure, described the situation best. ‘We can cure Alzheimer’s in our mice every week, but when it comes to clinical research where real progress needs to be made to cure people, there is simply no funding available.’
A single early-stage clinical trial can cost $10 — $30 million or more. Each trial just tests one potential component of a cure. With each trial, we learn vital lessons and come a step closer, but hundreds of trials are needed to test countless combinations and compounds. High-risk Venture Capital investment models need some degree of predictability. If you know that 9 of 10 startup companies fail, you can still make money as long as you make 20X profit on the 1 successful outcome. With the high cost and unpredictable nature of clinical stage drug discovery for a complex disease like Alzheimer’s, there is no way to create a sound mathematical model to forecast when a cure will be found or the amount of investment needed. This makes consistent Venture Capital investment impossible to sustain and has culminated in the current investment scarcity.
A comprehensive study of financial models for Alzheimer’s drug discovery, conducted by Andrew Lo, Director of the Laboratory for Financial Engineering at MIT, puts this in stark terms ‘our portfolio simulations show that the risk-adjusted return on investment of (Alzheimer’s) parallel discovery is insufficient to attract private-sector funding.’
What about charitable organizations and government funding?
The largest Alzheimer’s charity, the Alzheimer’s Association, raised about $300 million in 2016 and gave $29 million to support 159 research projects, almost all of which were pre-clinical. It goes without saying, that donors received zero equity in the research. It’s important to note that the Alzheimer’s Association does extensively benefit the public good by providing support to caregivers and advocacy, but their impact on advancing clinical stage research is rather small.
This is an inherent problem with a non-profit solution for this kind of social impact. Donors can be attracted to give with ads promising a particular impact which may legitimately be one of the missions of the non-profit. Once their donation is given, however, the non-profit can legally use those funds to support other related missions included in its charter. Donors do not own stock equity with their donation; they can’t sell their equity and get their money back. If the intended impact involves the development of a product which is eventually sold, the donors have no share in the revenue from that product, which seems both inherently unfair and builds in a lack of transparency leading to an inefficient impact model.
What about taxpayer-funded research?
In 2016, the U.S. National Institutes of Health (NIH) allocated $929 million for Alzheimer’s research. These funds were distributed in 1768 grants averaging a few hundred thousand dollars each and given mostly for pre-clinical research conducted by university labs. With the cost of clinical stage research in the tens of millions for a single study, this wide and shallow distribution of funds has little impact on clinical stage drug discovery and hence the process seems highly unproductive.
It is also hard to imagine that there were 1768 great ideas funded and much more probable, that as with much else in government, political motivations were involved. It goes without saying, that taxpayers had no direct say in how their money was spent, they also receive no stock equity when the government invests in private sector research.
A bold solution to end Alzheimer’s
We believe that InvestAcure’s Public Benefit Corporation model can solve this investment bottleneck by enabling the millions impacted by Alzheimer’s to power clinical stage research with affordable, automated, spare change investment.
The mechanics of the model are similar to other online investment platforms such as Stash and Acorns. InvestAcure is set up as an SEC-registered Registered Investment Advisor (RIA). Users download an app, set up an online investment account and give InvestAcure 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.
The motivation for this investment is not profit, but rather a feeling of doing one’s best to address a legitimate fear, investing a reasonable amount in a way that makes sense. Much like the motivation for buying term life insurance, you do not expect to die in the next 10 years, however, it makes sense to spend $50 a month to feel secure in the knowledge that you have done your best to protect your family in case you do. Similarly, if you know that you have a 30% chance of getting Alzheimer’s, it makes sense to spend $50 per month to have a reasonable chance for a cure.
Public Benefit Corporation model vs nonprofit
A Public Benefit Corporation is responsible to its shareholders in prioritizing a mission of a specific social good over profit. In the case of InvestAcure, our mission is finding a cure for Alzheimer’s and eventually, other deadly diseases. Unlike a charity or government taxes, the Public Benefit Corporation model is inherently fair and accountable, with each investor receiving fair equity in the outcome and putting investment to work directly in funding companies with specific trials, vetted by a world-class scientific board.
Why spare change investment?
The idea of spare change roundup investment is not new. A company called Acorns, has in a short time attracted two million users to an investment platform offering spare change investment as a way for Millennials to save a bit for retirement in a psychologically painless way.
While spare change doesn’t seem like a lot, automatically rounding up one’s transaction adds up to about $50 per month on average. 26% or 70 million Americans have a relative with Alzheimer’s. If just 1.5% become spare change investors, that’s $600 million annually, $3 billion over 5 years. That would have 30X the impact of Bill Gates’ recently publicized $100 million commitment to Alzheimer’s research. At a 15% participation rate, the number jumps to $6 billion annually or a staggering $30 billion over 5 years! That’s enough for countless clinical trials and a reasonable chance for a cure.
Just think about it, does it really make sense for millions of people to wait around to die from a horrible disease, simply because one can’t make a profit developing a cure?
Doesn't it make more sense to invest our spare change, regardless if we make money or lose it, but so that we have a pretty decent chance for a cure in 5, 10 or 15 years?
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 financial 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.’
Such encouragement is gratifying and gives us the confidence to believe that the InvestAcure solution can work. It also means that the sooner we launch and scale, the sooner new studies can get funded. The sooner a cure is found and people stop dying!
This realization is probably both the most awesome feeling of purpose any human being can hope to experience and the heaviest possible responsibility. To think that every day, every hour, every minute, if we could just work a bit harder, a bit faster, a bit smarter, another life could be saved.
It reminded us of that scene at the end of Schindler’s list, when Oskar Schindler, surrounded by the 1100 people he saved from the Nazi death camps, is given a parting gift of a ring. It’s inscribed with the words from the Talmud ‘Whoever saves a single life, saved the whole world.’ He takes a gold pen from his jacket pocket and breaks down crying realizing that with just that pen, he could have saved another life.
So, to keep ourselves accountable we decided to put up an office clock, which counts down every 38 seconds and reminds of another life lost. If our idea makes sense to you, join us and together we can stop that clock 38 seconds sooner!
Over the past six months since we quit our day jobs and began working on building InvestAcure full time; a lot has been accomplished:
- We have built a demo of our investment platform and are about six months away from launching a full working model.
- We completed SEC registration and InvestAcure now an official Registered Investment Adviser (RIA)!
- Most importantly, we assembled an incredible team, which includes some of the world’s leading Alzheimer’s scientists, who believe that this solution offers the best chance for a future when Alzheimer’s will be cured.
Right now, we are working to raise our Seed round, so that we can finish building the investment platform and launch in the next six months. If you feel, like we do, that working on an idea which could save countless lives is just about the most meaningful thing one can do in life, the good news is that there is plenty of room to get involved:
- We need as many people as possible to sign-up to download the app when it is launched, this saves precious time once the app becomes available and let’s our investors, who are helping us develop the platform, know that there is strong base of people who care! Go to www.investacure.com to sign up today!
- We need volunteers to spread the word to their local community, answer questions and galvanize support. We simply can’t do this alone. If you are a natural leader and want to help build the InvestAcure community, email us at info@investacure.com Please put the word Volunteer in the subject of your email.
- Finally, if you have the financial means to become a Seed investor and partner in building the InvestAcure platform faster, so that more lives can be saved, please email me at mtokarasky@investacure.com and we can schedule a time to speak.
Max Tokarsky is the Founder & CEO of InvestAcure, a FinTech Public Benefit Corporation startup based in Brooklyn, New York. He can be reached at mtokarsky@investacure.com
