The BioDAO Manifesto
Last updated
Last updated
Mission: Build a global decentralized community to identify, fund, and support real-world biotech projects to accelerate biotech innovation and solve humanity’s most pressing challenges.
The last decade has seen unprecedented developments in digital currencies and biotechnology. COVID-19 has not only highlighted the immense power of biotechnology and its vast potential, but also highlighted serious gaps in our preparedness to confront medical emergencies and develop therapeutic interventions as needed. While advancements in digital currencies brought the benefits of decentralization to industries such as finance, music and digital art, innovation in biotechnology continues to be fraught with problems of centralization and misaligned incentives which could slow humanities ability to respond to events such as COVID-19.
The process of drug discovery and innovation in the pharmaceutical industry is undergoing a profound shift with publicly funded academic institutions driving key research discoveries while subsequent privatization of assets benefits a small group of investors.
Academic institutions serve as a bedrock for biotech startup formation and drug discovery because they bring together unique talent and absorb high risks of early stage research. This is possible because academic research in life sciences is primarily funded by government funded grants (e.g., National Institutes of Health (NIH), National Cancer Institutes (NCI), National Science Foundation (NSF), National Institute of Allergy and Infectious Diseases (NIAID)) and non-profit funding (e.g., Howard Hughes Medical Institute, Wellcome Trust (UK), MacArthur Foundation, Bill and Melinda Gates Foundation) focused on creating societal value.
As academic research discoveries mature, biotech startups advance them to biotech innovations and, ultimately, new drugs through clinical trials. These biotech startups are then acquired by drug companies using their financial war chests and access to low-cost capital. This leads to publicly funded research disproportionately benefiting for-profit corporations.
This trend has a remarkable impact on drug development and is only increasing: the number of biotech startup companies formed as a result of technology licensing has increased from 145 in 1994 to 278 in 2000 to 1,024 in 2016. Of the 30 top-selling drugs worldwide in 2000, only 5 originated in universities while the remaining 25 were developed by drug companies. By 2018, more than one-half of the top 30 drugs could trace their origins back to academic labs supported by public funds. This increase in tangible output from a relatively small number of geographically restricted academic labs provides a compelling case for what can be accomplished by a more inclusive approach.
Assets from universities often fail to be out-licensed as they require additional capital injection and development. These innovations end up in the “Valley of Death” failing to reach the clinic.
Additionally, some of these university projects, with high potential to improve public health, do not advance to become therapies because they do not fit strategic (e.g., risk of cannibalization of existing products) or commercial (e.g., lack of established distribution channels) priorities of drug companies. As a result, many valuable biotech innovations that could have high value to patients never reach their target populations due to the inefficiencies of the system.
The majority of early stage biotech funding comes from several dozen legacy biotech VC firms centered across 4 neighboring zip codes in Cambridge, MA, and several zip codes in San Diego, CA and the Bay Area, CA. This leads to unevenly allocated resources across the biotech ecosystem.
At its core, most legacy biotech funding has been biased towards clinic ready projects or projects from celebrity labs and repeat founders. Naturally, this means that their funding focus is narrow and most capital flows to Massachusetts and California where VCs have long established relationships with research institutions and where most biotech operators reside.
As a consequence the next 10 states, which receive $9B of NIH funding per year (equivalent to the size of Novartis’ annual R&D budget) to develop life science, receive very little capital to translate academic research into biotech companies. The result is a substantial deadweight loss to society which we estimate at $100b+ per year in market value and 25-30 life saving therapies per year.
The traditional biotech funding approach leaves critical gaps in pre-clinical translation of bench sciences into full-fledged biotechs. A Professor, Postdoc, or PhD student typically doesn’t have the skills and tools to translate their science into a therapy and may not even know where to start due to the complexity of the process. An ecosystem funding model is needed to cover these gaps, similar to a model created by a16z which helped the firm amass 56 unicorns in its portfolio.
As such, we see a strong need for a better model for biotech innovation, funding, and development which can accelerate the discovery and commercialization of new medicines and drug discovery technologies.
BioDAO is a global decentralized community which supports and funds promising early stage biotechnology projects from university tech transfer offices and academic lab benches to fully formed biotech companies.
BioDAO leverages Web3 to address the long-standing problem of equitable participation in the biotech industry. BioDAO will serve as the gateway to receive funding for early stage biotech projects. BioDAO is not a venture capital fund and will not fund projects from the treasury at this stage; funding will be provided by an independently managed VC fund, DeBio Fund, based on BioDAO's investment recommendations. BioDAO may elect to work with other independently managed funds using this model.
We envision BioDAO becoming a new ecosystem for biotech projects with the BIO token serving as the index for this ecosystem. The diversification of funding through uncorrelated projects (betting on mechanistically uncorrelated biological pathways and modalities) will ensure the stability of the DAO treasury. In addition, we plan to create new avenues for funding biotech projects based on the BIO token in Phase 2 (e.g., marketplace or crowdsourcing).
From a biotech industry perspective, BioDAO would bring the global biotech expertise on a single platform solving the current challenge of siloes among VCs, select academics, and drug companies. With democratized DAO governance, BioDAO will bring transparency and democracy to biotech deal flow, diligence, and funding. With the biotech operating platform, BioDAO would solve the biotech talent scarcity challenge by tapping into large underutilized pools of talent (researchers at institutions outside key biotech centers such as Massachusetts or California) and helping them grow into seasoned biotech founders and executives and increase velocity of execution.
Ultimately, our dream is to build the first Web 3.0 biotech engine which is operated by the DAO to solve the most pressing challenges of healthcare making affordable high quality healthcare accessible to everyone on the planet.
