This story was originally posted on April 6.
A philanthropic gap fund launched last year by the University of Michigan's Life Sciences Institute last week announced its first four awards totaling $680,000 to support LSI research projects with commercial potential.
The first four awards, which range from $100,000 to $200,000 over one year and are eligible for renewal upon reaching certain milestones, will provide gap funding for LSI researchers to further develop therapeutics for cancer, neurodegenerative disease, diabetes, and invasive strep infections.
Despite the first round of awards, the fund, called the LSI Innovation Partnership, has not been immune to the effects of the current economic downturn. It has received about $2 million from donors to date – one-fifth of the $10 million it set out to raise over five years but just $400,000 more than it had in its coffers as of June last year (see BTW, 6/18/08).
LSI Director Alan Saltiel this week told BTW that the economy has "definitely" been a factor in slowing down the solicitation of donations.
"We've gotten some tentative commitments but we haven't signed agreements on those yet," Saltiel said. "But we've got a lot of leads for funds. I'm confident that we'll be OK."
The LSI opened its doors in 2003 as a hub for UM scientists to collaborate on translational and human health-related research. Though independent from UM, its more than 30 faculty members hold joint academic appointments in one of UM's schools or colleges.
Because its researchers are, first and foremost, UM faculty members, LSI's tech-transfer activities are handled by the UM Technology Management Office. Any licensing revenues derived from LSI projects are divvied up with two-thirds going back to LSI and one-third to UM.
As of last summer, LSI researchers had generated some 40 to 50 invention disclosures, but had yet to spin out a company or execute a licensing deal. In order to provide a boost for the translational science aspect of its research projects, the LSI conceptualized the Innovation Partnership fund and began soliciting donations in late 2007.
Saltiel declined to disclose the identities of donors to the Innovation Partnership program, but last year said that they mostly comprised venture capitalists, UM alumni, associates of the LSI, and philanthropists who have an interest in specific research projects.
Although donors are expected to remain close to the projects in terms of progress reports, they do not receive rights to intellectual property or a financial stake in any licensing deals or companies formed as a result of the projects they helped fund.
Saltiel told BTW that LSI is contemplating toying with the pure philanthropic model a bit to potentially attract more backers.
"We're thinking about an adjustment where we might let [donors] make parallel investments when the projects are a little farther along – sometime a little bit ahead of company formation or additional VC investment," Saltiel said.
The projects announced last week, all of which will receive initial funding for a year, are also eligible for renewal based on the completion of specific milestones set forth at the beginning of the project and on the continuing commercial promise of the research.
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Saltiel said that LSI expects to eventually award the new projects add-on funding that will bring the total amount awarded into the $200,000 to $500,000 range.
"It's not like an NIH grant where we'll assign dollars to each person and they can spend it on what they want," Saltiel said. "We'll be working closely with investigators to monitor what they're doing and make sure that they are able to hit the goals of the project."
The four projects announced last week, along with primary investigators and award amounts are:
• Stephen Weiss, a professor at LSI; professor of medicine and oncology; and chief of molecular medicine and genetics at the UM Medical School, received $250,000 to further develop inhibitors of enzymes used by tumor cells to infiltrate the bloodstream and metastasize;
• Jason Gestwicki, an assistant professor at LSI and of pathology at the UM Medical School, received $100,000 to find and develop chemicals that might eliminate misfolded proteins that cause many neurodegenerative diseases, based on his previous discovery that stimulating a natural protein called Hsp70 protects against protein misfolding in cellular and animal models;
• Saltiel, who is also a professor of life sciences and internal medicine at UM, received $150,000 to develop inhibitors of a protein kinase found to be an integral part of chronic, low-grade inflammation associated with obesity and often leading to the type of insulin resistance found in diabetes; and
• David Ginsburg, professor at LSI; professor of internal medicine and human genetics; and professor of medicine at UM, received $180,000 to further develop compounds that block Group A Streptococci bacteria from dissolving protective blood clots and spreading.
Three of the projects – Weiss, Gestwicki, and Ginsburg's – were identified by LSI last year as strong candidates to receive an Innovation Partnership grant.
A fourth candidate project in the area of anti-cancer compounds derived from bacteria and led by UM College of Pharmacy Professor David Sherman was replaced by Saltiel's project.
Saltiel said the decision to fund all of the projects was made by an independent five-person committee of entrepreneurs, executives, venture capitalists, and academics charged with vetting applications for funding from LSI researchers.
The Gestwicki and Saltiel projects were specifically chosen for funding directly by a donor, but still needed to pass muster with the independent review committee based on the strength of their science and commercialization potential. Meanwhile, the Weiss and Ginsburg projects were both identified and vetted by the panel.
In addition to the cash awards, LSI, which is housed in an approximately 250,000-square-foot facility on the UM campus, also provides Innovation Partnership awardees with wet-lab space, equipment, and scientific support equivalent to half or more of donor funds. LSI also hires research scientists with industrial experience to work with each of the teams.
Awardees have also been paired with members of the review committee, which LSI disclosed for the first time last week. They will continue to work with the research teams pro bono as advisors, but have the advantage of being aware of project developments and thus first in line to make add-on investments if desired.
The group comprises James Neidel, managing director of New Leaf Venture Partners; Jeffrey Leiden, a partner at Clarus Ventures and former chief scientific officer at Abbott Labs; Frank McCormick, director of the Comprehensive Cancer Center and Research Institute at the University of California, San Francisco, and founder of Onyx Pharmaceuticals; Craig Parker, senior vice president at Proteolix and former chief biotechnology analyst for Lehmann Brothers; and David Walt, chemistry professor at Tufts University and co-founder of Illumina.
"Each project has a couple of these guys helping out, providing invaluable support and guidance," Saltiel said.