Mogul Using Own $100 Million in Race to Cure Daughter Prompts Novartis Aid

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Mogul Using Own $100 Million in Race to Cure Daughter of Spinal Muscular Atrophy Prompts Novartis Aid
by Brad Fisher on Wednesday, September 7, 2011 at 9:11am

Mogul Using Own $100 Million in Race to Cure Daughter Prompts Novartis Aid



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By Robert Langreth and Alex Nussbaum - Sep 6, 2011 9:01 PM PT

Bloomberg Markets Magazine







Sept. 7 (Bloomberg) -- Dinakar Singh, chief executive officer of TPG-Axon Capital Management, discusses his daughter Arya's crippling genetic disease and how it led him to establish and fund the Spinal Muscular Atrophy Foundation. Singh is featured in the October issue of Bloomberg Markets magazine. (Source: Bloomberg)

Goldman Sachs Group Inc. (GS) partner Dinakar Singh discovered in 2001 that his 19-month-old daughter, Arya, had a crippling genetic disease called spinal muscular atrophy.

The malady makes the nerve cells that control muscles gradually deteriorate. There are no treatments, let alone a cure, Bloomberg Markets magazine reports in its October issue. Worse still, while the gene causing the ailment had recently been discovered, nobody in the drug industry was doing much about it, he says.

“I was fearful and anxious that treatments would be developed, but far too late to save Arya,” says Singh, 42, who founded and runs New York hedge fund TPG-Axon Capital Management LP, which has $8.1 billion in assets. “We didn’t want to find out 25 years later that the science was really there but there isn’t a drug because nobody focused on it.”

Singh, who left Goldman in 2004, has spent almost $100 million of his own money to create and fund the Spinal Muscular Atrophy Foundation. He wants to discover and develop a drug that he hopes will help his daughter, who is one of 25,000 SMA patients in the U.S. Children with severe forms often die within a few years, while those with mild cases can live a normal life span with supportive care. Arya, 11, and starting sixth grade, uses a wheelchair.

‘High-Speed Initiative’

Singh’s foundation is making progress. It’s collaborating with Novartis AG (NOVN), which may bring a drug into human tests as soon as 2013, says Mark Fishman, research chief for the Basel, Switzerland-based drugmaker.

The foundation has pumped $13 million into PTC Therapeutics Inc. in South Plainfield, New Jersey, which has produced a pill that increases the life span of mice with SMA. It also has funded a scientist whose research has led to an injectable drug developed by Isis Pharmaceuticals Inc. (ISIS) of Carlsbad, California. That treatment may enter human trials before year’s end. Singh says he’ll enroll Arya if that drug gets to the testing phase before others.

“The SMA Foundation has converted this from a slow-moving exercise to a high-speed initiative,” says Darryl De Vivo, a pediatric neurologist at Columbia University Medical Center in New York, who has overseen Arya’s care since her diagnosis.

Frustrated with the sluggishness, or nonexistence, of medical research, Singh and a small band of wealthy parents whose children have serious illnesses are spending millions of dollars to fund drug development.

‘Change the System’

These benefactors include hedge-fund managers, private- equity investors and entrepreneurs, many of whom have made their fortunes on Wall Street. The principles they apply in their jobs -- managing complicated tasks, making investments and expecting positive results -- translate to their new endeavors, says Stacy Palmer, editor of the Chronicle of Philanthropy.

“Business executives have a better understanding of how markets work and have started to ask tougher questions,” Palmer says. Their goal: “Change the system and whatever is slowing it down.”

The new philanthropists are building on a foundation laid by well-known predecessors. John D. Rockefeller in 1901 formed the medical research institute that would become New York’s Rockefeller University after his grandson died of scarlet fever. Billionaire Michael Milken, who pioneered junk bonds, founded the Prostate Cancer Foundation and FasterCures, a think tank to speed progress toward cures in all medical fields.

‘Lots of Shovels’

Microsoft Corp. co-founder Bill Gates and his Bill & Melinda Gates Foundation have focused on malaria, polio and other global health threats. James Simons, founder of hedge fund Renaissance Technologies LLC, and his wife, Marilyn, started the Simons Foundation. It’s the second-biggest funder of autism research, after the U.S. National Institutes of Health, according to recent data.

Benefactors such as Singh are taking a direct role in early drug research. They want to make it easier for companies to produce a medicine or venture firms to fund it. They begin with basic research discoveries, often in obscure illnesses, and advance the work. Instead of handing money to scientists and getting out of the way, they stay involved, hire experts and push researchers to work together rather than compete.

“We have focused on having lots of shovels ready and having the maps ready and having all the supplies ready, so companies are willing to prospect for SMA drugs,” Singh says. His idea: “Make it easy for companies, take the risk down for them so they can get a sense cheaply and easily whether there is something there.”

Arya’s Efforts

Even Arya is doing her bit. In her family’s 11th-floor condominium that looks north over New York’s Central Park, she says she’s excited about holding a bake sale to raise money for SMA research. She has just returned from precautionary tests to make sure a respiratory infection didn’t become serious. Her mother pats her back when she coughs weakly. Then Arya scoots off in her wheelchair to play with her younger brother and sister.

James O’Sullivan, director of foundation services for Rockefeller Philanthropy Advisors, says about half of his 25 medical philanthropy clients at any time are interested in the hands-on approach Singh’s foundation is taking, up from a handful 15 years ago.

“There is a world of difference between 10 years ago and now,” says O’Sullivan, whose New York-based organization advises wealthy patrons. “Today’s donors are much more interested in seeing how their dollars make a difference in a disease.”

New Breed

Victoria Jackson, a cosmetics entrepreneur whose husband, Bill Guthy, co-founded direct marketer Guthy-Renker LLC, is among the new breed. Her daughter, Ali, came down with a central nervous system disorder at age 14 called neuromyelitis optica, which can cause blindness.

Since then, Jackson has spent more than $15 million on her foundation to develop treatments. Ali, now 18, has avoided severe complications by taking immunosuppressants.

Jackson says scientists often work independently with their own agendas, wasting money.

“I manage where every dime goes and make sure there is complete disclosure and collaboration among the researchers,” she says.

Private Investors

Private investors may become crucial as drugmakers cut research and close labs, O’Sullivan says. Pfizer Inc. (PFE), the world’s largest drugmaker, will spend $6.5 billion to $7 billion on research in 2012, down from $9.4 billion in 2010. That makes working with a foundation that already has done some of the grunt work attractive.

“Drug companies want to come in later in the R&D process and provide backing for potential therapies that have more evidence behind them than in the past,” O’Sullivan says.

Singh says his foundation can focus on the science because it doesn’t have to invest huge amounts of time raising money. And with no need to impress donors, the organization can spend on the business of developing lab tests and building the pieces that make it easier for companies to discover SMA drugs.

The foundation’s $16 million in research spending last year almost equals the $19 million the NIH spent on spinal muscular atrophy.

Novartis saved years by taking advantage of advances made by foundation-backed scientists and the laboratory techniques they developed to test compounds for SMA. The company was able to focus on screening for drugs rather than diverting staff to basic research, says Daniel Curtis, a research manager at Novartis.

Rich Donors

The SMA Foundation and its academic partners may reap a benefit if a Novartis drug reaches the market and sells well. Singh’s foundation could get back a multiple of its spending on the collaboration, says Karen Chen, the organization’s chief scientific officer, who declined to give specifics. Any money would allow the foundation to reinvest in science, she says.

As an incentive for Novartis to work quickly, an agreement allows the company to repay nothing if it completes clinical trials fast enough.

Rich donors with a personal stake in a disease, while well- meaning, can divert resources from illnesses that may be closer to a cure or afflict more people, says Arthur Caplan, a bioethicist at the University of Pennsylvania in Philadelphia.

“There can be some kind of distortion of emphasis,” he says.

SMA affects 25,000 Americans versus 5.4 million for Alzheimer’s disease, according to the SMA Foundation and the Alzheimer’s Association.

Head Start

Singh says spinal muscular atrophy is more likely to be treatable than common neurological diseases such as Alzheimer’s, whose origin is uncertain. He says he wouldn’t have spent as much money if he thought an SMA treatment was a long shot. Scientists already know what causes SMA, giving researchers a head start, he says.

Garen Staglin, a senior adviser at San Francisco-based private-equity firm FTV Capital, is tackling diseases that are more widespread, including schizophrenia. Staglin’s International Mental Health Research Organization has raised $135 million for brain research during the past 17 years. It hosts an annual music concert at his Napa Valley, California, vineyard. Dionne Warwick was scheduled to headline a concert in September.

Staglin’s son, Brandon, now 39, was diagnosed with schizophrenia in 1990. Staglin was in France on business and got a call that police had pulled Brandon over as he drove erratically.

“He told me he felt like he had lost half his brain,” Staglin recalls. “He just lost his ability to think coherently.”

‘Run Toward It’

Rather than hide Brandon’s situation, Staglin acted.

“We decided we had two choices: We could either run away from the problem like too many families with these illnesses,” he says. “We wanted to run toward it.”

Another effort, Staglin’s One Mind for Research, is working with former Rhode Island Congressman Patrick Kennedy to get drug companies and brain researchers to collaborate on treatments for Alzheimer’s, autism, schizophrenia and other conditions. This effort is based on the joint-research approach that has long been used in the semiconductor industry.

For Alexander Silver, the motivation is his 4-year-old son, Jackson. Silver, a partner at New York-based private-investment firm P2 Capital Partners, LLC, started the Jackson Gabriel Silver Foundation in 2010 to find a treatment for a rare genetic condition called epidermolysis bullosa. In the disease, a protein that holds skin layers together is missing, and the skin blisters and shears off with any friction. Half of Jackson’s body is covered in high-tech bandages that cost $6,000 a month.

Cutting Red Tape

Silver, 34, who has raised more than $400,000 since 2008 and aims for $10 million or more, predicts a good treatment will come if money flows without red tape to the right projects. His foundation -- along with one run by Paul Joseph, a private- wealth broker at Morgan Stanley Smith Barney LLC whose 7-year- old son has the condition -- has backed work at the University of Southern California in Los Angeles. The research has produced a potential drug.

The approach has garnered $26 million in venture capital from Boston-based Third Rock Ventures to form a company and move the therapy in human trials.

No Budget on Life

“The skills I developed professionally matter a lot for this,” Silver says. “Just like investing, you are allocating capital to the projects that have the highest probability of success and the lowest probability of failure in the quickest time frame.”

For Singh, the effort to save Arya is a family affair, and he promises to spend as much money as necessary. Singh’s wife, Loren Eng, has a Master of Business Administration from Stanford University and works fulltime leading the foundation.

The eight-member staff includes former researchers from Roche Holding AG (ROG) and Pfizer.

While Arya has a mild form of SMA, she has gotten weaker. She has trouble lifting her arms above her head and needs fulltime nursing. Every cold is a threat because her frail lung muscles put her at risk for pneumonia.

“I don’t think there is a budget on your daughter’s life,” Singh says. “As long as there is a chance of doing something and we have the ability to do it, we will do it.”

‘In Tears’

Singh, who won’t disclose his compensation, says his fund returned 60 percent in the six-and-a-half years since he started it on Feb. 1, 2005. That’s more than double the Standard & Poor’s 500 Index’s 25 percent return during the period.

Arya, the oldest of Singh and Eng’s three children, was born in March 2000 and developed normally at first. She was slow to walk, however, taking her first wobbly steps at 15 months. Within months, she began regressing. A doctor friend saw Arya’s stiff gait at a party in August 2001 and told them to get it checked out right away.

Eng had become pregnant again, and two days before her delivery date, she got an abrupt call from the neurologist confirming the worst about Arya.

“Loren called me in tears,” Singh remembers. “I was saying: ‘What does it mean? What does it mean?’ She said the doctor didn’t say anything. She has SMA. That’s it.” Singh and Eng spent the next days in a frantic race to figure out the prognosis -- and to discover whether their second child, Kiran, also had SMA. He didn’t.

‘Untreatable, Incurable, Fatal’

“When we found out about it, we were told it was untreatable, incurable and fatal,” Singh says.

De Vivo, the Columbia University neurologist, met the couple and explained that children like Arya have defects in or are missing a gene called SMN, discovered only in 1995. It directs cells to make a protein necessary for neurons that control muscles.

He introduced them to Columbia colleague Thomas Jessell, a motor neuron biology expert. They also met Gerald Fischbach, a neuroscientist and then dean of Columbia’s health sciences and medicine faculty. All three became key advisers to the SMA Foundation.

“I met them and decided that SMA was a perfect disorder to mount a major attack on,” says Fischbach, who’s now scientific director for the Simons Foundation Autism Research Initiative. “The science was ripe.”

‘Truly Solve It’

At first Singh and Eng had planned to back existing charities, such as Families of Spinal Muscular Atrophy. They gave $750,000 in May 2002 to fund a clinic at Columbia. In 2006, they agreed to give as much as $15 million to help fund a motor neuron research center at the university.

The more they learned, the more they became convinced that, unlike most neurological diseases, SMA might be conquered.

“What struck us as different about SMA was that there really seemed to be a chance to truly solve it -- and perhaps even in a time frame that could really help Arya,” Singh says.

A quirk in the genetics of SMA increased their hope. In many inherited diseases, a crucial gene is missing or defective and the protein it makes is absent or doesn’t work. In SMA, the body has a backup gene that produces small amounts of the SMN protein. That’s why children with the disease live at all.

By the time Singh and Eng became involved, an idea with potential to help SMA sufferers was already being discussed in the medical literature: If someone could find a chemical that could safely boost the availability of the backup protein, that discovery could form the basis of a drug. Yet as far as they could tell, no large drug or biotech company was focused on SMA.

‘Terrible Gap’

“You had this terrible gap,” Singh says. “There was no one saying, let us take these interesting discoveries and come up with something that could be a drug.”

The couple started the foundation in 2003. Equipped with PowerPoint presentations that showed why SMA was a lower research risk than most genetic diseases that could yield a drug with $1 billion in annual sales, they approached more than a dozen companies. It was a hard sell.

At the American Academy of Neurology conference in 2004, only three of seven biotech companies they invited showed up.

“There was never an outright no,” Eng says. Instead, “polite conversations went nowhere or calls were not returned.”

To her, it seemed drugmakers were focused on heart disease, cancer or diabetes and their significant commercial markets. The NIH alone spends $5.8 billion a year on cancer research.

‘A Buzz’

Singh and Eng started paying small biotech companies to screen for chemicals that might increase the supply of the SMN protein. They, along with other SMA charities, also funded Adrian Krainer, a researcher at Cold Spring Harbor Laboratory on Long Island in New York. He was working on a technology that had shown some promise, even though the foundation’s scientific advisers said the approach was a long shot.

“There was a buzz; there was this new couple, they are very wealthy, people thought they were in a position to make a difference,” says Krainer, who met Arya in 2002 when she could still walk.

For the next few years, the foundation backed research testing dozens of existing drugs to see if any of them increased the SMN protein. The scientific advisers got together in 2008 for a meeting at the Ritz-Carlton hotel in Half Moon Bay, California.

“It was the most-depressing meeting ever,” Eng recalls. “It was clear we had nothing.”

‘Huge Implications’

By then, Arya was in a wheelchair. At this point, the SMA Foundation had captivated Novartis. In 2002, the company had appointed Fishman, a scientist and former Harvard Medical School professor, to direct research operations.

He says one idea was that success in treating rare genetic diseases might pave the way for dealing with more-common ones. Columbia’s Jessell and Fischbach pitched him on SMA in 2005.

“It seemed tractable from a scientific point of view, with potentially huge implications on health,” Fishman says. “Others weren’t working on it, which is another good reason to do it.”

Still, it wasn’t until November 2007 that Novartis began its effort. It started with neurobiologist Rajeev Sivasankaran and a few assistants. Sivasankaran, 41, designed a quick way to test the more than 1 million compounds in Novartis’s collection of chemicals to see if any had potential for SMA. A compound with some modest effect could become a starting point for a safe and effective medicine.

‘Full-Court Press’

Novartis was lucky. By December 2009, the researchers had found a drug that improved motor function in mice with SMA.

“That got the whole group excited,” Sivasankaran says. The SMA Foundation and Novartis scientists get together every three months to review progress. At a June 1 meeting, researchers from the foundation, Novartis, Columbia and Harvard crowded into a conference room to hear the latest results.

“It is a full-court press,” Fishman says. “We are pushing as hard as we can.”

Still, Novartis human trials are two years off at best, Fishman says.

Meantime, Repligen Corp. (RGEN), a Waltham, Massachusetts-based biotechnology company, in July began an initial safety test of its SMA drug on people. It licensed this drug from the charity Families of SMA, based in Elk Grove Village, Illinois.

More Efforts

Singh’s foundation is closing in with two more efforts. PTC Therapeutics last year found compounds that boost the life span of mice with the disease. The company could begin human trials in late 2012, Chief Executive Officer Stuart Peltz says.

“It is absolutely incredible,” he says. Mice that would otherwise barely be able to move look normal with PTC’s drug, he says.

Singh and Eng say they’re particularly excited by Isis Pharmaceuticals’ progress, based on work by Krainer at Cold Spring Harbor. Isis published data in March showing that its drug could boost motor neuron levels -- and survival -- in mice with SMA. The medicine, which is injected into spaces around the spine, corrects the defect that causes the backup gene to produce too little protein.

“I have been doing drug development half of my life,” says Roy Vagelos, former Merck & Co. CEO, who has followed the SMA Foundation’s research. “This will be the first time if it works that a family had gotten behind a problem, a genetic defect in their own family, and come up with a solution.”

Arya is very aware of her illness and the battles to conquer it, even though she doesn’t like to talk about it, Singh says. She often asks her parents what her adult life will be like and why she has to be sick.

“Trying to understand what this all means is a big deal now,” Singh says.

Arya’s Homework

For a homework assignment last year on Egyptian mythology, Arya imagined a goddess of illness.

“She thinks of cures for sicknesses and puts hints for these cures in people’s minds,” Arya wrote. “She has a puppy face, puppy paws, human body and is always thinking of cures.” Eng sent a copy of her daughter’s essay to Novartis’s Fishman.

“It hits you right where you live,” he says. “That kind of innocent gratitude is the most wonderful reward you can get.”

To contact the reporters responsible for this story: Robert Langreth in New York at rlangreth@bloomberg.net; Alex Nussbaum in New York anussbaum1@bloomberg.net.

To contact the editor responsible for this story: Michael Waldholz at mwaldholz@bloomberg.net