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Biological Chemistry

It’s All About The Money

by Bibiana Campos Seijo
November 2, 2015 | A version of this story appeared in Volume 93, Issue 43

A mind-blowing amount of money (in excess of $100 billion) is being bandied about in relation to the possible merger between drugmakers Pfizer and Allergan (see page 9). Money—although the figures seem vanishingly small in comparison—is also the link between two high-profile stories that were recently in the news.

The figure in the first story is $7.6 billion. This is the amount that the Wellcome Trust announced on Oct. 21 that it would spend over the next five years on biomedical research. The Wellcome Trust is the second-highest spending charitable foundation in the world after the Bill & Melinda Gates Foundation. It funds research globally and has backed efforts to sequence the entire human genome, mitochondria research that led to IVF techniques for preventing disease, the development of artemisinin combination therapies for the treatment of malaria, and, more recently, work funding and evaluating experimental Ebola therapies following the epidemic.

This increase in funding is pretty impressive: The Wellcome Trust has spent $9.1 billion over the past 10 years (a total of $16.8 billion since its creation in 1936), so pledging $7.6 billion over the next five years effectively increases its investment by more than $3 billion over an equivalent period of time. The areas it has identified as investment priorities are kind of a no-brainer and include the following:

1) Drug-resistant infection—The money will go toward exploring how to best protect the treatments we have and develop new ones to try to minimize growing resistance to antibiotics.

2) Vaccines—Poorer countries do not have the means to stimulate research and development of vaccines as well as policy to address the many lives that are lost every day to preventable diseases.

This is very good news for researchers in the biomedical sciences around the world, with potentially many chemists and biochemists working in the fight against infectious disease benefiting from these extra funds.

The figure in the second story is $9 billion. This is the value of start-up Theranos, a company whose low-cost blood-testing technology—small blood sampling devices called nanotainers—requires only a few drops of blood to run more than 30 lab tests quickly, cheaply, and effectively without requiring the use of needles.

The company has had a lot of attention in the media because of the potential disruption that this technology would bring to the established blood-testing market, an industry that in the U.S. alone is worth $75 billion per year. But a lot of the hype has come from the PR efforts around the personality of its founder and CEO, Elizabeth Holmes, a 31-year-old Stanford dropout who has been billed as the next Steve Jobs.

The most recent coverage of Theranos has been the result of an exposé published by the Wall Street Journal alleging that the company was underdelivering on its promise and it had been overvalued. It’s not unusual for a start-up to hype its potential in the early days; it’s a way of attracting early adopters as well as investors. However, the Journal alleged that the company was misleading the public and potentially also regulators, with FDA issuing a report indicating it found flaws in Theranos’s nanotainers and quality-control procedures.

To further complicate things, during the media storm, it was revealed that the company had acted back in July to reduce the size of its board from 12 to five members.

Theranos is a disruptive business valued on the basis of its potential rather than on reality, so we need to be cognizant of that. Additionally, high-value private companies like Theranos are under no obligation to publish earnings or progress reports on their technology. Theranos hasn’t yet subjected its proprietary techniques to outside scrutiny or scientific validation, fueling the fire of skepticism. Is it just growing pains? FDA has not said that the technology is flawed, and Holmes has promised to make data available. So only time will tell.

Views expressed on this page are those of the author and not necessarily those of ACS.

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