Thanks for having us. I guess it's your day of listening to geeks.
I'm a professor at the U of T, Oxford and McGill, and an entrepreneur who has founded several companies, among which is Affinium Pharmaceuticals, whose new antibiotic is in late phase II clinical trials. When we sold it, it provided excellent returns for investors when it was bought by a Swiss company.
Today I'm speaking in my capacity as a chief executive of the Structural Genomics Consortium. It's a hard word, so let's call it SGC. It's a global charitable research company headquartered in Toronto, with labs in six different countries. I'm also the chair of the board of M4K Pharma, a Toronto drug discovery company I'll tell you about.
My colleague here, Max Morgan, is a patent lawyer by training who practised in the private sector in America and Canada and joined us recently as the lead in legal matters and policy.
I doubt you know about the SGC, but we're the largest, longest-running and arguably most successful global public-private partnership with the pharmaceutical sector. We carry out fundamental research at our labs, and over the years we have attracted about $400 million in funding for our science. About $200 million comes from 10 different pharmaceutical companies.
What's most interesting from the policy point of view is that despite our intense collaboration with global pharma, we never, ever file for patents. All of our funders, including the industry, believe that the fundamental science we do will have the most scientific and economic impact if made openly available to all, as so-called open science.
Indeed, the success of our organization has led us to be considered global pioneers in biomedical open science. Max and I advise governments and foundations all around the world on how open science can not only promote discoveries but can stimulate economic growth.
I'd like to mention that Genome Canada has funded us continuously since 2003—one of our many funders—and has played a central role in developing and honing this open-science business model.
I'm not here to preen about what we've accomplished but rather to humbly admit we need to do much, much better. As members of the global biomedical research community, our aim is to develop innovative treatments of the diseases that afflict society, and we're not delivering. Globally, despite literally trillions of dollars of public funding over the past decades and an equal amount of private sector funding, we are inventing too few new medicines. What's worse, those medicines we invent are priced at levels that will cripple our health care system and are unaffordable to most people on the planet. Something is not right, obviously.
I know that the Canadian government is desperately looking for ways to help, but I also appreciate the inherent conflict you're in. On the one hand, Industry Canada's or ISED's role is to help develop policies that promote economic growth, and if we create biotech companies that create new medicines, it's viewed as a success. As much as ISED is happy about this, Canadians are less so, because in our sector, business success is predicated on high drug prices. Simply put, the big policy problem is that if public funding supports and buys into the current business and investment models used to incentivize drug discovery, we may get new medicines, but they'll be priced unaffordably. It's nobody's fault; it's just the business model on which the world currently operates, and currently there's no option.
Will advances in science help? Sure, but not as much as we hope. As Marc told you about personalized or precision medicine, it's fantastic science. In the long run, it will be awesome, but in the short term, it's going to make things worse. Let's explain.
The brilliant genetic work by CIHR- and Genome Canada-funded researchers all over the country is disassembling all complex diseases into a range of precise genetic smaller diseases. Diabetes, for example, was one or two diseases. Now it's going to be dozens of rare diseases that should be able, in theory, to be treated more precisely, more individually.
However, think about it. From a business perspective, this means that the immense, uniform diabetes market is being fragmented into smaller markets, and each is a group that needs its own new medicines. Unfortunately, as the patient groups and markets get smaller, the cost of inventing a medicine has stayed the same. If you have costs that are the same and the market is smaller, the only way to get your required return on investment is to set the drug prices higher. It's simple math. Now with new medicines being priced at literally hundreds of thousands of dollars a year, that simple math is going to bankrupt us.
What do we do? In our organization over the last 15 years, we've shown that open science provides the most cost-effective way to carry out fundamental research of relevance to drug discovery, and it delivers the science goods, and we'll talk about that. Moreover, it has the buy-in from industry. Why can't the model be extended all the way from the science we do to the registration of new drugs?
Max and I decided to try to figure out how. We looked at how to create a made-in-Canada business model to invent new but affordable medicines, a business model that creates companies to make a profit but not an exorbitant profit, and a business model that balances the tension between economic growth and societal benefit. In short, we wanted a drug discovery model that I hope you think is Canadian, and I think we've done it.
At its core, our model is based on two principles. First, it extends and leverages the expertise we have in open science and applies these learnings to drug discovery. We believe that open science uniquely provides a way to ensure that any public investment in research and drug discovery is used not only to develop new affordable medicines but also to increase science knowledge in the public domain.
Second, the open science model more efficiently uses existing biomedical research funding. As Salim was saying, Canada alone spends $5 billion each year supporting biomedical research, mostly at our universities and hospitals, and the world invests about $300 billion in biomedical research in companies and in the public sector.
I put it to you that there's a lot of money around, and I'm not here to ask you for more. The open science model provides a mechanism to tap into, focus, and align existing sources of capital, including public funds, towards a public-good business objective.
You might be thinking that I'm a hippie, that I'm smoking something...or at least tomorrow, maybe. If a company makes its science and research available, how can it protect itself against competition? When Max was doing his graduate work at Harvard, studying intellectual property law and drug discovery, he thought deeply about this and how one could cleverly use protections that are already provided by regulators like Health Canada—not patents: you don't need patents to stave off competition—and about the advantages of this approach.
When we started working together, we realized that this alternative form of market protection is consistent with open science. If you follow a patent strategy, you can't share it. If you follow this strategy, you can share it and get all the benefits of it.
We thought, wow, this new drug-discovery model just uses existing laws in new ways. We can get the scientific, social, and economic advantages of open science and yet still be able to fend off competitors in the marketplace.
We formed M4K Pharma to test the ideas. M4K stands for Meds for Kids, and it was formed to invent medicines for rare pediatric diseases. The first project is diffuse intrinsic pontine glioma, which is a brain cancer in the brain stem. You can't operate, and all of the children die—all of them. There are no drugs for the disease. The market is too small for the traditional business model.
As background, this science story is also cool. It starts with the work of genius clinician scientists in Montreal and Toronto, who, with public funding, in part from Genome Canada, discovered the genetic makeup of that cancer and uncovered a gene that's the cancer's Achilles heel. In an fortunate twist of fate, Alex Bullock, who is a prof at our lab in Oxford, happened to be the world expert in that gene. It's a really cool test case for the business model. We have sick children with no treatment, a disease that's not attracting interest, and a team of world experts who are our friends and are committed to the public good.
We started it, and it's going better than we hoped. Based on the science and a competition—we shouldn't get money for free—we got public funding from the Ontario Institute for Cancer Research. We matched their $2-million grant with donations and corporate in-kind contributions, giving us another $2 million. Consistent with open science, we share our most recent science every month on WebEx for anyone who wants to listen.
As a result, the scientific community is responding in kind. Last month a doctor from Washington, D.C., offered to do some experiments for the company for free. Scientists in Barcelona and Philadelphia offered advice and also resources. In May, there was a stunning presentation from Boehringer Ingelheim, which is a large pharma in Vienna, where their cancer group is. They called in and told us what they'd discovered internally about the gene and highlighted things we should watch out for.
Think of that. It's a large pharma phoning a competitor drug-discovery organization and letting them know their trade secrets. It's all because we're doing it openly and sharing our science. I think we're only just learning the competitive advantages of this open model. There are undoubtedly surprises to come. Indeed, we're so encouraged that we're starting the process of forming M4ND, Medicines for Neurodegeneration, such as Parkinson's, and M4ID, Medicines for Infectious Disease, such as antibiotic-resistant bacteria.
How can the government help? We're not here for new funding, but I think it would go faster and the model would attract more interest with a few policy changes to incentivize like-minded entrepreneurs.
The first thing we suggest is to tweak existing government funding programs to allow applications from folks with alternative business models. There's a monolithic position in Canada, and frankly all over the world, that patents are key to making new medicines. This is patently untrue, as it were.
Policy suggestion number one is that government and public funding programs should embrace business models with innovative strategies to bring products to patients.
Policy suggestion number two is that we should tweak Health Canada's regulatory protection scheme to provide additional incentive for companies that commit to open science and affordable pricing, the two of them. If a company shares its science and agrees to make the product affordable, Canada should find ways to encourage that.
My last policy suggestion is we should—and I absolutely agree with the previous speakers—continue to support research in the public domain, such as the research supported by CIHR and Genome Canada. Fundamental research provides the foundation on which all medicines will eventually be discovered.