When Bob Beall joined the Cystic Fibrosis Foundation’s medical staff in 1980, he was intent on finding a cure for cystic fibrosis, which causes the lungs to clog with mucus.

“The problem was that we didn’t know enough about the disease to be able to think about how to intervene,” Beall says, “so we set out on a strategic research agenda. First, we established research centers in leading institutions around the country to help us get a better understanding of the disease, which leads to chronic lung infections that often prove fatal.”

That effort culminated in 1989, when a team of CF Foundation-supported scientists discovered the CF gene. “We had the gene, we had the science, and we started to get a good understanding of what had gone wrong in CF patients,” says Beall, who was named president and CEO of the CF Foundation in 1994. What they didn’t have were pharmaceutical companies that were willing to invest large sums of money to develop drugs that had the potential to counter the effects of the defective CF gene.

That’s largely due to CF’s status as an “orphan disease,” so called because it affects a relatively small number of people (about 30,000 in the U.S., 70,000 worldwide). That means that the profit potential from drugs that could eventually be brought to market may not justify the amount of time, money and effort it would take to develop those drugs.

“It’s estimated that it now takes an average of 14 years and $1.4 billion to develop a new drug for any kind of disease,” Beall says, “so drug companies don’t want to risk their money on orphan diseases when they can invest in the development of treatments for diabetes, heart disease, and other illnesses that affect a much larger number of people.”

It’s an economic reality that may seem harsh, but Beall has found a way to soften the blow while directing the CF Foundation’s financial resources where they can do the most good.

It’s called venture philanthropy, and it’s a concept that Beall has championed as a way of getting biotechnology companies to overcome their reluctance to pursue the development of drugs that will have a limited payoff—or may never pay off at all.

“When you develop drugs you go through a discovery stage where you identify compounds that may be effective against the disease, then you move to the development stage where those compounds are put through clinical trials,” Beall explains, noting that venture capitalists don’t like to invest in the early stages because it can take so long for them to get a return on their investment.

The idea behind venture philanthropy is to reduce the financial risk for companies that are willing to conduct early drug discovery and development research. “With venture philanthropy we pay for the early stages of a drug’s development, and then the companies we’re investing in will take that drug through clinical trials,” Beall says.

As part of the deal, the CF Foundation gets royalties or a share of the profits from any drugs that eventually make it to market. The Foundation then reinvests the money in new research or other early-stage development efforts to start the cycle all over again. Since the inception of the program in 1998, the Foundation has committed nearly $300 million to venture philanthropy.

Citing one such arrangement, Beall described the process that has led to clinical trials for the two most promising drugs ever anticipated by cystic fibrosis patients. They’re known as VX 770 and VX 809, and they’re offering hope that the effects of cystic fibrosis can be mitigated more than ever before.

“To start the development process for these two products, we paid a research company $42 million to screen hundreds of thousands of chemical compounds to find a few that had the potential to correct the basic defect in cystic fibrosis,” Beall explains.

“ It ’s estimated that it now takes an average of
14 years and $1.4 billion to develop a new drug
for any kind of disease so drug companies don’t
want to risk their money on orphan diseases...”

The two compounds are now being shepherded through clinical trials by Vertex Pharmaceuticals—after what has grown to become a nearly $79 million investment from the CF Foundation.

“It’s our biggest collaboration so far,” says Beall, who received an honorary degree from Albright College in 1998 and has served as an Albright trustee since 2004. “Vertex will now spend more than $500 million to take the compounds through clinical trials and hopefully get them to the point where they could move to the patients.”

The prospects for the two compounds are particularly exciting because they have the potential to treat the basic defect—not just the symptoms—of the disease. “To treat the basic defect in a genetic disease like CF is very rare, and to have it work is going to be exciting for our patients,” says Beall.

Most cystic fibrosis patients are diagnosed by the age of two. When the Cystic Fibrosis Foundation was founded in 1955, the life expectancy was just five years of age. Now it’s about 37. If the Vertex compounds work as anticipated, CF patients could see another large gain in life expectancy.

“It’s not what you would call an ultimate cure, in that the disease goes away,but it provides for the ultimate treatment so that these drugs alone could add decades of life for cystic fibrosis patients,” Beall says.

While the outlook for the Vertex compounds is promising, Beall is quick to point out that they’re just two of the products the CF Foundation has in its drug development pipeline. That pipeline now contains more than 30 drugs, all in various stages of development, all aimed at improving and extending the lives of cystic fibrosis patients, all made possible because of venture philanthropy.

It’s a concept that’s efficient, effective and potentially profitable, and it’s getting attention because it works. For example, the CFF/Vertex venture
philanthropy partnership was recently used as a case study for the Harvard Business School.

What’s more, Beall says, “Many patient-oriented, voluntary health organizations are adopting this model because they’ve seen our success.
It’s changed the paradigm of how voluntary health organizations organize themselves, but we stand out because of the size of our investments.”

In 2007, Beall notes, voluntary health organizations spent about $75 million, in total, on venture philanthropy. About $48 million of that was
invested by the CF Foundation.

“Even though we’re a ‘small’ disease we invest more money in investment and research, per patient, than any other voluntary health organization,” Beall says. “We have a $102 million research program, which means that we have about $4,000 to invest in research for every diagnosed patient. For such a small community to raise so much money really speaks to the passion of the families that we deal with and the fact that they see the potential of our drug development pipeline.”

But for Beall, bragging rights as the largest venture philanthropist are meaningless. “The most important thing is that venture philanthropy has
given us a development pipeline for drugs that will make a difference,” he says. “The net result is that there’s never been such a sense of hope and optimism in cystic fibrosis as there is today.”