You Can Rescue Medical Breakthroughs from the Valley of Death
Halo Cures, a crowdfunding startup, will usher new drugs and devices through the rockiest stage of development.
When Kevin Leland’s boss donated $500,000 to research in immunotherapy for gastric cancer, Leland wondered how he could do something as meaningful. The problem, though, was that he had nowhere near as much money as his boss, who was Eric Lefkofsky, the billionaire co-founder of Groupon. How, Leland wondered, could people like him substantially advance biomedical breakthroughs — especially if he wanted to fund cures for something in particular, rather than general causes like cancer or heart disease?
Leland came up with his answer a few years later. It’s a tiny startup called Halo Cures, which he launched in 2016. He describes it as a curated crowdfunding platform for new drugs and medical devices. It aims to raise money for specific, vetted projects that need only a relatively modest infusion of cash to bring them through a period known as the “valley of death,” when funding for product development can be scarce.
“We are connecting people,” Leland says, “who care about a particular disease or condition with the most promising research targeting that disease or condition.”
Leland, 38, conceived of the idea while living in Atlanta and working as the marketing director for a financial-technology company. To start Halo Cures, he moved to San Francisco with one piece of luggage and shared a room with a young polyamorous woman in a “community house” that accommodated roughly 40 other people. He soon upgraded — to a mattress on the floor of a closet in a two-bedroom apartment where eight other people lived.
It will all have been worthwhile if Halo can close the chasm between basic biomedical research and the creation of real therapies for patients.
“Halo is certainly the most interesting thing that I’ve seen in a while,” says Karthik Gopalakrishnan, associate director of life sciences at Duke University’s office of licensing and ventures.
Many things create the valley of death. Because basic research garners more prestige and career prospects, graduate students and postdocs eschew translational research — a field that’s necessary to develop a drug or device. There’s also a knowledge gap, as fewer of today’s researchers are also clinical doctors than in past decades.
Sometimes, Leland says, a fledgling project doesn’t need that much money to get it through the valley. For example, once researchers have identified a molecule as a promising drug, they may only need $200,000 to develop it to the point that a pharmaceutical company will take a chance on it and fund clinical trials. It’s this latter stage that’s the most expensive part of biomedical research, costing millions of dollars before approval from the Food and Drug Administration. Halo’s goal isn’t necessarily to fund a project all the way through — just to help it become more attractive for major investors.
However, even with Halo’s help, an investment in a new drug would entail considerable risk. A drug that reaches the clinical phase of development still has only a 10 percent chance of success, says Michael Kurilla, the director of the clinical innovation division at the NIH’s National Center for Advancing Translational Sciences. For its part, the center is trying to bridge the valley of death by providing funding and training through its Clinical and Translational Science Awards.
Because they tend to be cheaper to develop than drugs, devices may benefit more from crowdfunding. Indeed, Halo’s first campaign, which kicked off last month, is raising money for a surgical device developed by Philip Frykman, a surgeon at Cedars-Sinai Medical Center in Los Angeles. He believes the device gives surgeons a better way to fix a rare birth defect that leaves babies with a malformed rectum. He’s used the instrument in other countries, but to bring it to the U.S. he needs $500,000 for further testing and FDA approval. He’s raised more than $100,000 through Halo so far.
Halo’s not alone in trying some version of crowdfunding for medical innovation. RedCrow, co-founded by former Talking Heads keyboardist and guitarist Jerry Harrison, is connecting investors with startups in health and medicine. There also are crowdfunding platforms for scientific research, such as Experiment and Consano, launched by a cancer survivor, Molly Lindquist.
But unlike many other platforms, Halo will help promising projects with their marketing — Leland’s area of expertise — to shepherd them across the valley of death. Eventually, he wants to assemble small committees of experts to vet the projects. For now, he’s trying to partner with technology transfer offices at research institutions, relying on their expertise, credibility, and name recognition.
Halo is a for-profit company, charging an 8 percent fee on the money raised. But eventually, Leland hopes to eliminate the fee and grab a stake in whatever therapies or devices become successful. The company would act like a venture capital firm, except that the funding would come from donors — with no expectation of a return — instead of investors. Halo would, essentially, profit from people’s generosity.
That may seem exploitative, but Leland is confident that donors won’t mind: they want to cure a disease, not make money. “Because it’s been proven out in other spaces, I think it’s less of a leap to say that it can work for biotech as well,” he says. After all, people are plenty willing to give to companies like Oculus Rift, the virtual-reality developer that arose on Kickstarter and later was sold to Facebook for $2 billion.
The exact business model could still change, as Halo is brand-new. Leland is the only full-time employee, sometimes working out of another startup’s cramped office above a cannabis dispensary in San Francisco. His challenge, Gopalakrishnan says, will be to reach enough donors and build credibility and trust.
But if Halo works, research can surely benefit. There are always more worthy projects than available funding, Gopalakrishnan says: “Science is a beast. You can always keep feeding it money.”