iOS app Android app More

Anthony Tjan

Anthony Tjan

Posted: June 18, 2009 04:47 PM

Can the VC Model Help Cure Alzheimer's?


Legendary venture capitalist and Chairman of Greylock, Henry McCance, is a co-founder in Cure Alzheimer's Fund. Incorporated in 2004, the fund uses a venture approach to disease research. The results have been nothing short of extraordinary as their work linking new genes to Alzheimer's has been named by TIME as one of the top ten medical breakthroughs of this past year. Their message and approach continues to widen awareness as two of their researchers, Dr. Rudy Tanzi and Dr. Sam Gandy, joined music celebrities in this month's GQ Magazine feature and photo spread on the "Rock Stars of Science."

I have been fortunate enough to have Henry McCance as a mentor, friend, and investor. Last month we sat down to talk about Cure Alzheimer's Fund and specifically how he has applied lessons from 40 years plus of venture capital experience into an inspiring non-profit model. Here are some excerpts from that conversation. A video of the conversation can be found below as well.

Tony Tjan: Take a step back for us and describe how large the Alzheimer's problem is and why it's so important to get breakthrough research now?

Henry McCance: I knew nothing about Alzheimer's disease until it touched my family personally. It was discovered just over one hundred years ago and the only fool proof diagnosis is an autopsy of the brain. There's no blood test or MRI scan one can take. There are about five million Americans with the disease and it costs the country about $100 billion of Medicare and Medicaid expenditures annually. Not captured in that figure is the price tag of the stress and burden of the caregivers or spouses. Estimates suggest by the time we reach 2050 there will be 16 million people in the U.S. with Alzheimer's disease with someone developing the disease every 33 seconds. Between now and 2050 -- unless we find a cure -- the cumulative expenditures of Medicare and Medicaid will be nineteen trillion dollars.

HM: Like a lot of ventures, it started with sketching some things out on paper with like-minded people coming together somewhat serendipitously. In 2004, Cure Alzheimer's was started by three families: venture capitalist, Jacqui Morby, whose mother had Alzheimer's, and her husband, Jeff; the Rappaport family of Boston, and our family.

TT:
Describe the exact model you are using for Alzheimer's research and how it is applying best practices from the VC industry?

HM: A successful VC is proactive about finding the most interesting markets and fields and providing growth to the world-class leaders therein. We try to do the same.

We were exceptionally fortunate to recruit Dr. Rudy Tanzi of Mass General Hospital, who would be our chief visionary, develop a world-class research consortium around him, and finally to find Tim Armour, HBS '75, who just left the JASON Foundation as executive director, to join as our CEO.

TT: What made Dr. Tanzi standout so much for this new Fund?

HM: I've spent my whole career as a venture capitalist, studying and analyzing entrepreneurial talent, and when I met Rudy, I knew that he was a world class research talent in his field. He was smart, charismatic and could explain complex subjects simply.

TT: Let's get back to that VC model approach -- how else did it manifest itself?

HM: The most important way it did was in our mission: we are daring to be great. VCs don't seek 5% improvements; they try to invest in things that will be transformational, like Google, Cisco, Red Hat, and others. We wanted to apply the same upside-seeking strategy to Alzheimer's research. We looked at the way research was traditionally done and said we needed a much more entrepreneurial and VC mindset towards funding projects that could move us more rapidly to a cure. When we hosted a dinner for some leading neuroscientists, we learned that they spend a disproportionate amount of time, 30 to 35%, filling out bureaucratic forms to receive research grants from the NIH or other well-meaning organizations. The worst part is that the grant making peer review process is so risk adverse resulting in incremental progress. That kind of funding is the equivalent of a one-yard plunge by a full back from the New England Patriots, a far cry from the breakthroughs we wanted to fund. The scientists told me that they don't have any funding available for the twenty and thirty-yard pass kind of research. This was like the early days of VC when some very talented entrepreneurs did not have good funding sources for big ideas. After that, I was convinced that there was a role for Cure Alzheimer's Fund.

TT: What kind of monitoring or evaluation systems do you have for the research you fund?

HM: We're taking a higher risk set of research projects and hopefully we are doing it in a more sensible way with checkpoints on the way so we're not going to waste the dollars. It's very important to define the projects in a way you can see tangible evidence in a relatively near term. To date we've funded about $8.25 million in research and are very pleased with the outcomes.

TT: On that note, Cure Alzheimer's Fund had a terrific past year. Can you comment on some of these wins including being named a top ten medical breakthrough by TIME magazine?

HM: When I first met Dr. Tanzi, he explained that there was a manageable, very important project we could tackle right away. As a geneticist, he was convinced that the funding of an Alzheimer's Genome Project (AGP) was critical towards rapid research advancement. The goal of establishing this project was to identify and map the full set of disease risk factors so that better therapies could be better developed. The project was picked by TIME as one of the Ten Medical Breakthroughs of the Year for publishing details of a subset of seventy new genes linked to the disease.

Prior to 2006, the time we started the research, virtually all the work being done on the genetics of Alzheimer's was done around four genes. We recognize that there is still a lot of work to be done, but at the same time are incredibly proud of the progress we helped make happen.


This article first appeared on Harvard Business Publishing on June 15th, 2009.
2009-04-06-HBlogoforpartners.jpg