Professionally, I am an attorney with doctorates in pharmacology and immunology. I have practiced intellectual property law, specializing in the biotech/pharma space, for over 30 years. As of late, I also manage or assist in the management of several companies.
Privately, I have been married for almost 40 years, am a father of four and a grandfather of three, and coached basketball for over 25 years.
Now the irony. I lost one parent to heart disease, and one died with the onset of dementia in her 90s. My father-in-law suffered from cardiovascular disease most of his adult life, and eventually succumbed to a blood-born fungal infection most likely caused by chronic antibiotic treatment for a respiratory infection. My mother-in-law recently suffered a stroke, also a product of cardiovascular disease. Meanwhile, the companies I am involved with are pre-revenue start-ups that own therapeutics and diagnostics in the areas of cardiovascular disease and dementia and treatments which could have obviated my father-in-law’s fungal infection. It is ironic that each of the treatments I am involved with could have extended my parents’ and father-in-law’s lives and helped prevent the onset of my mother-in-law’s stroke had they been available during their lifetimes.
But what to make of all of this?
As stated above, I have worked in the biomedical space for over three decades. I see some futile projects, but I also see many potentially valuable projects that never progress past the start- up phase. Many fail for reasons such as poor management, crossed purposes, or simply failure to prove efficacy in humans; but many fail in the pre-revenue phase because, by definition, these companies constantly must raise funds from investors.
Government input in this area is minimal. The U.S. Food and Drug Administration does not invest; it regulates. The National Institutes of Health sponsors mostly academic projects and is not in the business of investing. According to NIH reports, in 2015 about 17-18 percent of grant applications were funded, and more than 83 percent of its budget went to more than 300,000 research personnel at over 3,000 universities, medical schools, and other research institutions in every U.S. state and throughout the world. This money generally supports academic research, not business development nor product development.
There are investment banking firms, but they prefer investing in income-generating businesses to lower their risk. As reported by Forbes (July 23, 2015) regarding the distribution of venture investment in biotech, “The concentration of these ‘venture’ dollars in the biggest deals is significant. The top 10 deals... which in any given period represent roughly the largest 7-8% of the financings, accrued 45% of all the biotech funding. The top deals have captured a similar proportion for the past twenty quarters... This concentration of funding reflects a very high Gini Coefficient, to steal a term from income inequality literature; there are relatively few ‘haves’ and lots of ‘have-nots’ when it comes to the flow of funding.”
There is room––some would even argue a desperate need–– for direct investment by government into non-revenue-generating small businesses. This view is not coming from the goal of making owners of small businesses realize their dreams of great wealth. Rather, this comes from the viewpoint that too many therapeutics and diagnostics are not currently in the public domain because of simple lack of funding.
Dr. Kenneth Kohn is a Ph.D. and lawyer, practicing patent law since 1979. He is CEO of Kardiatonos Inc, managing partner of Prebiotic Health Sciences, and senior advisor to Excision Biosciences and Ganderland.