A Venture Philanthropist Makes the Case for Advocates Taking Equity
March 16, 2023
Debra Miller’s son Hawken was diagnosed with Duchenne muscular dystrophy at the age of 5. Rather than just accept his fate with the rare neuromuscular condition, Miller and her husband Paul launched CureDuchenne to stimulate the development of treatments and potential cures for the condition. The organization subsequently launched a venture philanthropy fund that, to date, has financed 17 research projects that have advanced to human clinical trials and seen others invest nearly $3 billion in follow-on funding for companies that it has backed. We spoke to Miller about CureDuchenne’s experience with venture philanthropy, the case for patient advocacy organizations taking equity in exchange for their funding, and what other advocates hoping to stimulate drug development can learn from CureDuchenne’s experience.
Daniel Levine: Debra, thanks for joining us.
Debra Miller: Oh, it’s my pleasure to be here. Thank you for having me.
Daniel Levine: We’re going to talk about Duchenne muscular dystrophy, the CureDuchenne Venture Fund, and how it’s leveraging its investments to accelerate the development of treatments and potential cures for the condition. Let’s start with your own story. Your son, Hawken was diagnosed around the age of five with Duchenne muscular dystrophy. What happened?
Debra Miller: So, that was 21 years ago, and we knew something was wrong for a couple of years, and we went on the typical rare disease diagnostic odyssey and begged and pleaded our pediatrician to try and get to the bottom of it. And we were basically treated as if we were the neurotic parents, and here they come again. So, unfortunately, that is still going on with Duchenne and patients are still not being diagnosed early enough.
Daniel Levine: Well, for listeners not familiar with the condition, what is Duchenne muscular dystrophy?
Debra Miller: Duchenne muscular dystrophy is a progressive muscle wasting disease. It’s caused by a defective gene that about half the time is passed down from mother to son. And about half the time it’s just a spontaneous mutation where there’s a lot of mutations that happen in nature, and that’s why we have different color eyes, for example. But this is a mutation that affects a particular gene that is responsible for stabilizing and protecting muscle cells. And without that protein, the muscles degenerate over time. Boys start walking, or start losing the ability to walk around the age of 10 or 12. And the life expectancy historically has been around 18. Fortunately, over the past 20 years since CureDuchenne has been around, the life expectancy has actually increased by about 10 years. But we’re still losing, losing patients sometimes very, very early.
Daniel Levine: A lot of us live in this world of drug development and we’ve seen so much innovation aimed at Duchenne muscular dystrophy, but it’s difficult to remember that despite all the activity, most patients today still have little in the way of treatment options. How are patients treated today?
Debra Miller: So, we have come a long way. When you look at the number of clinical trials and the number of drugs that are under development and how these drugs have moved through the development pipeline into phase 3 trials and a couple of approvals and a couple of expected approvals maybe this year. But for the most part, patients have two things available for them: just steroids, which carry a whole host of other side effects; and physical therapy, which is really very important and will continue to be important even with approved drugs.
Daniel Levine: What led to the creation of CureDuchenne? Why did you decide to create it even though there were other patient organizations that already existed?
Debra Miller: It was never my intention to start a nonprofit organization. I did not know the nonprofit business, but both my husband and I come from sales and marketing backgrounds, and we knew we had to do something when we were told, “your son has this terrible disease, he’s going to stop walking when he is 10. He’s going to die when he is 18. There’s nothing you can do, no cure, no treatment. Go home and love your son.” That was, I guess if you want to poke a mama bear, those were the words to do it. And so we looked around and tried to work with a couple other Duchenne organizations and really appreciated the work they were doing, but they focus more with academic research and family support systems. And although that’s all very, very important, just because of our business backgrounds, we felt that we could make more impact by working with biotech and pharma companies, because ultimately those are the companies, those are the people that are making drugs and taking them to market. And we wanted to be able to get the science out of the academic labs as quickly as possible and get it into a drug development program, hence translational research. So, that became our sweet spot, and we just really felt a sense of urgency, and I will always reiterate and confirm how important the academic scientists are and we’d be nowhere without them. But the output of their work is obviously really good science, but also papers that are published. And we wanted the output of our work to be actual drugs that are inpatients.
Daniel Levine: CureDuchenne invested in drug development companies prior to its creation of CureDuchenne Ventures, its venture philanthropy fund. When did CureDuchenne make its first investment and how did the decision to launch the Venture Fund come about?
Debra Miller: So, early on we had a couple of projects that we funded; they’re academic, and again, just the pace at which they moved was kind of slow and the accountability where we really wanted to know what was happening, where were the milestones, how could we influence this and could we set a timeline? And so, we pivoted really quickly to funding biotech companies even before our first investment. We actually made grants to PTC Therapeutics, which went on to get ataluren approved in the EU and other parts of the world. We funded ReveraGen, they’ve changed their name. I’m so sorry, I’m going to come back to it because it’s now licensed by Santhera, but it’s vamorolone, which is hopefully going to be approved this this year. It’s a different type of steroid. And we also funded Sarepta, which went on to get the first Duchenne medicine ever approved and hopefully will be up to get their gene therapy approved later this year. And so, we’ve provided funding and realized very quickly that these companies stand to make a lot of money off of this investment. And obviously we’re small investors, but pivotal investors because we came in at really crucial times and we also brought a lot of scientific expertise with us. And so we pivoted real quickly to the next time we were asked for funding to ask for equity, and we got it. And that was in 2014. And we funded a small biotech company in the Netherlands that unfortunately did not get their drug approved, but 10 years later they were bought out by BioMarin. And we e were able to take the bolus, the capital that we got from that one investment and fund five different research projects. And so, from there, it’s just snowballed where we’ve been able to take our, our gains and, and multiply it many times over with different research investments.
Daniel Levine: The company I think you were looking for was ReveraGen, is that right?
Debra Miller: Thank you. Yes. Okay.
Daniel Levine: There are plenty of patient organizations that make grants to researchers and drug developers. What’s the case for the venture philanthropy model in taking equity stakes in exchange for funding?
Debra Miller: So, anybody who has run a rare disease organization understands how hard it is to raise money. With Duchenne, there’s maybe 10,000 families and 12,000 patients in the U.S. And if you just apply normal economic demographics, you come to find out that very few of those families are going to be millionaires, are people that are able to really provide substantial funding to drug development. And drug development is extremely expensive. It’s not like we’re feeding a handful of people in a local community. We are actually sending millions of dollars to drug developers to start a program. So, we have to have alternate means of funding. And it only makes sense that if a biotech company or a pharma company is going to take our hard earned dollars that we raise from people who care and love this cause and they’re giving their own personal money to CureDuchenne to be a good steward of those funds. It only makes sense that we would ask to share in the returns that a biotech or a pharma company may have. And so, to me, there’s no question that we would do that. In fact, I feel that it’s unethical, well, that might be a little too strong, it’s just not good practice for us to support commercial organizations at the expense of our donors and our patient community that’s working so hard to raise funds. So, we have been successful in funding projects that have had exits, meaning the companies have been sold to larger biotech or pharma companies, or they’ve had IPOs. And so, there has been a return. And instead of us going back and going to our donors over and over and over again, starting from scratch, we’re able to go back and take the gains that we’ve realized from our investments and supplement it with donor dollars and make more and more research investments.
Daniel Levine: There’s been a lot of evolution in the way drug companies interact with patient organizations, and you used the word accountability earlier, but I’m wondering how being a venture investor might change the way a drug company interacts with you relative to being a grant making rare disease patient organization. Do you find they take you more seriously? Do they treat you like other investors?
Debra Miller: That’s a really good question. It’s changing, so I can tell you how it used to be where the companies obviously didn’t like it. They were used to getting checks from nonprofit organizations that really weren’t asking too many questions. And so, there was a little bit of pushback in the beginning, but because we have two of the most brilliant PhDs in Duchenne, they wanted us to be involved in their investments. And so over time, it’s become less of an issue. In fact, the biotech companies, early startup companies, and even the VCs that are investing want CureDuchenne involved now because of our expertise, and because if we finally make a decision to fund this company, it’s almost like the stamp of approval. We review probably a hundred research opportunities a year, and we fund, you know, one to five every year. And so we apply a great deal of due diligence. When we do make an investment, it bodes well for the company and for future financing and optics. And so, it’s turned out to be a really good partnership all the way from co-founding a company with an academic founder all the way to investing in a series A.
Daniel Levine: How does being a venture philanthropist change your calculus in deciding what you’ll fund? How might you consider risk and reward relative to, say, a grant maker or a traditional venture investor?
Debra Miller: It doesn’t affect it at all. When we look at a project, potential funding project, we are not even thinking about the return. We’re strictly looking at it from a scientific standpoint because we’ve been in this long enough. First of all, I’m a parent and we just want drugs and therapies for our kids. And so that is like the first filter. But we also recognize that there’s probably not going to be a return if it’s not good science. And so, the equity and the financing part of it really is dragged along as a consideration. But first and foremost, we look at the science and the team. Do they have good science and do they have a team that can actually pull it off? And in drug development, it’s two steps forward, one step back. And so, you’ve got to have a team that has been through that—the ups and downs of drug development—to see it through, to ultimately get a drug into a clinical trial.
Daniel Levine: Is CureDuchenne at this point funded solely by the returns it generates, or does it have other sources of funding that builds the investment fund?
Debra Miller: A lot of CureDuchenne Ventures funding is coming from our returns and our investments. CureDuchenne is a nonprofit organization, continues to raise money as any nonprofit does through donors, through fundraising events and sponsorships from pharma companies, for our patient advocacy work. So, the funding that we get from our donations is spread amongst all of our programs. The funding that comes in from our research investments, about 90 percent of that at least, sometimes even more, goes straight back into CureDuchenne Ventures research fund. And the reason I hesitated there, during Covid when we had no regular income coming in for the organization, we did dip into a tiny bit of the equity, but for the most part CureDuchenne Ventures returns go back into the investment fund.
Daniel Levine: And what motivates someone to donate to CureDuchenne Ventures rather than more traditional patient advocacy?
Debra Miller: I think it depends on the donors. As more and more donors are becoming savvy about venture philanthropy, they’re learning that their dollars can be leveraged and multiplied. And this appeals especially to business people who understand the value of leverage. And they know that if they donate a hundred thousand dollars to CureDuchenne, that that can turn out to be, you know, a million dollars within a couple of years. For example, if you look at just the research investments we’ve made, it’s come close to just under $20 million of actual equity investments. And we did an analysis and we were very conservative with this analysis where we went back and looked at all the additional funding that these companies were able to garner through subsequent investments. And we only looked at the funding that came in the actual Duchenne project that we funded originally. So, let’s say $20 million CureDuchenne investment to these companies. Over time, those same companies were able to attract $3 billion in funding.
Daniel Levine: And are you exclusively focused on Duchenne muscular dystrophy?
Debra Miller: Yes, absolutely. Duchenne and Becker.
Daniel Levine: What’s the investment criteria? How early or late stage in investment will the fund make?
Debra Miller: We are agnostic to the stage. We co-founded a company called Exonics Therapeutics with Dr. Eric Olson out of UT Southwestern. This was a CRISPR gene editing company focused on Duchenne. And we started the company with Dr. Olson in March of 2017. And in June of 2019, Vertex bought the company outright for $245 million. And so that is one example of very early stage company formation. Many of our investments, we are part of a syndicate with VC firms, some of the biggest life science VC firms, familiar names. And again, they really like to have CureDuchenne involved, not because they necessarily need our money that much, but they really want the expertise of CureDuchenne as they’re going through the vetting process of whether they’re going to make an investment. So, many times we are co-vetting these companies and working together, and it’s good for us also because they have much bigger resources and they’re able to provide a lot of things like the patent investigation and more of the very expensive ongoing legal due diligence that has to be done.
Daniel Levine: You mentioned the Exonics investment. It’s one thing to invest alongside a group of VCs, but being a co-founder of a company is an entirely different story. This worked out quite well for you, but what was the decision in launching a company and are you thinking of doing that again?
Debra Miller: We would love to do it again. We’re looking at a couple opportunities. We’re very, very cautious. Eric Olson happens to be a very unique, I’d call him kind of almost a unicorn of a scientific founder in that he understands business, he understands biotech companies. He started a company before and he also knows what it is he wants to do, and he likes science and he doesn’t want to run a company. And so, it’s a combination of having just so much expertise, but also understanding the need to bring business people in. And so, when we look for a founder like that, obviously we want really good science, but we’ve also learned that sometimes academic founders believe that they can be CEOs and it usually does not work out well.
Daniel Levine: We’re in a different financing environment than we had been during the earlier years of the fund. Has that changed what you do in any way?
Debra Miller: It has in terms of the holdings that we have not sold that we were holding onto have obviously been affected by the downturn in biotech stocks, but it’s limited somewhat the scope, the number of investments we can make right now and the size of the investments. But it really hasn’t changed anything in terms of our search and evaluation of new research. In fact, we just hired a third PhD to come on board to really go out and scour the earth to find where the best research opportunities are to actually bring therapies to patients. And so, it’s not slowing us down that way, it’s just taken some of our capital off the table, but not enough to slow us down.
Daniel Levine: We’ve seen growing interest in venture philanthropy. I’m wondering what advice you’d offer other patient advocacy organizations that are thinking of creating a venture philanthropy fund of their own.
Debra Miller: That is such a good question, and I really wish I had listened to a podcast like this when we were starting it. I’d say that there’s three really important factors. Number one, you’ve got to have some capital and it’s got to be significant. We started off with our first investment of $1.3 million. Now, when we committed to that project into that contract, we had $10,000 in the bank. So, there’s nothing like necessity as a mother of invention to really get out there and raise money, but because it was our son and this was close to our hearts, we just had to do it. And we did. But having capital to invest is really important. Number two, having really good legal representation that you don’t want to skimp here. You want a really good legal team that is in life sciences, that does biotech deals all the time and understands the different vehicles for investing. And then, a chief scientific officer, and this is where it’s really, really important, where I’ve seen other—and again, I just know the Duchenne space—other organizations not, perhaps, choose the most successful research. It has come from having strictly academic scientists who know really good science, but they may not be able to project out through a phase 1, through phase 3 and FDA approval, the different steps that have to be taken and what might make a particular drug unattractive as it moves through the drug development line. And so, we were probably lucky, but a little bit smart also, that our first chief scientific officer we hired had come from pharma and biotech, and he had years and years of actual drug development experience. So, I think those are the most important things. And then just staying true to the mission and just looking at the science first and not getting seduced by potential financial vehicles that might look really attractive, but take you off mission, which by the way will get you in trouble with the IRS.
Daniel Levine: And what would you say the biggest lessons learned have been for what you’ve done to date?
Debra Miller: So, I’ll put it all together: just running the organization as a whole. The biggest lesson was to bring on help sooner and don’t think you can do it all on your own. I wish somebody had told me that, and unfortunately it takes some money to bring team members on, but it would’ve cut a lot of years off of our journey to get where we were.
Daniel Levine: And before we go, how’s Hawken doing today?
Debra Miller: Thank you for asking. Hawken is doing really well. He’s 26 years old. He was working out of college. He graduated from USC with honors in journalism, and he went to work for BIO News and worked there for about three and a half years writing about all different diseases and having a good time doing that. And he was also freelancing for the Washington Post, for their e-gaming publication. He just recently has left BIO News and came to work for CureDuchenne. So, I’m really excited. I realized that I was recruiting him for about a year because I just felt he would be so valuable here. And what I didn’t understand in his hesitation I found out when I just offhandedly said, “you know, you don’t have to report to me.” And I could see his expression change and the light bulbs came on. He’s like, all right, then let’s talk. So, he reports to our senior director of communications and he’s doing very well,
Daniel Levine: Debra Miller, founder and of CEO of Cure Duchenne. Debra, thanks so much for your time today.
Debra Miller: Thank you for having me.
This transcript has been edited for clarity and readability.
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