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Hopkins partners with investment management firm to boost early stage research

Johns Hopkins University scientists will get a $65 million infusion of funding from a Wall Street investment firm that they hope will help bring more drugs and other medical treatments to market.

The investment from New York-based Deerfield Management Co. comes as government funding for scientific research continues to decline and drug companies remain cautious about which studies they choose to invest in. Many funders want proof of a drug’s potential before they invest.


Such an investment offers research institutions like Hopkins an alternative to funding basic scientific inquiry that traditionally has been funded by the federal government through the National Institutes of Health or the National Science Foundation. The Trump administration’s effort to cut both agency’s research budgets was rebuffed by Congress this summer.

Deerfield Management, which also invests in early-stage and other health care companies, reached a similar deal in October to spend $50 million to fund research at the Broad Institute, a collaborative health science effort of Massachusetts Institute of Technology and Harvard University in Boston.


Under their agreement, Johns Hopkins and Deerfield have established an entity called Bluefield Innovations that will fund early-stage research projects on drugs that may show promise as a treatment but aren’t yet ready for human trials.

“This is a major collaboration for Johns Hopkins and it really helps bring early therapeutics that were discovered at Hopkins to the clinic,” said Dave Greenwald, director of business development for Johns Hopkins Technology Ventures.

Plans currently call for funding 10 to 12 projects, with the first expected to be announced in the next few weeks. Deerfield will disburse the money over five years and will make more funding available for research that shows a strong commercial potential.

In addition to financing, Greenwald said, Deerfield brings a commercial science expertise that he hopes will complement Hopkins’ foundation in strong scientific research. So, while Hopkins scientists may discover a treatment they find exciting, Deerfield will be able to look at the market and see whether such a therapy is needed.

“It may not be as exciting from a commercial perspective,” Greenwald said.

Financial details of the agreement were not disclosed, though both Deerfield and Hopkins would benefit from any successful treatment. Drug candidates can be licensed to others or spun into new companies, which also could be funded by Deerfield.

“This looks at early-stage studies and creates a funding mechanism to move things forward,” said James Flynn, managing partner at Deerfield Management. “It does it in a way where there is not a lot of discussion about the deal each time.”

The money will ease the burden on scientists and the university to identify funding for research on new therapies. It’s generally a many-years-long, complex and costly endeavor to research a therapy and bring it to market, and most candidates fail along the way.


Money for research has become harder to secure from traditional sources such as NIH, which spends about $32.3 billion on research a year. The Trump administration wanted to cut 20 percent of its research budget in the spring, but Congress instead awarded a $2 billion increase.

Federal agencies provided less than half of U.S basic science funding in 2015, according to the National Science Foundation. Other funding comes from nonprofits, universities and private companies.

Ritu Agarwal, professor and senior associate dean for research at the University of Maryland Robert H. Smith School of Business, said funding is common cause of stress among researchers across campuses.

More are turning to private companies and foundations as an alternative, she said, but it is important that these partnerships balance the needs of both sides.

“It needs to be done in a way that it can benefit the company but that it also has scientific value,” Agarwal said.

Flynn said the partnership with Hopkins took this into careful consideration.


“We were careful to make sure that Johns Hopkins benefits from all of this and we are sensitive to the Baltimore economy and where companies will end up being built,” Flynn said.

Deerfield’s research partnership with the Broad Institute is aimed at solving complex, early stage treatment challenges related to unmet medical needs. The money also will fund early-stage research and help support companies and other entities to develop the most promising projects.

In a blog post about the investment, Broad’s chief scientific officer, Todd Golub, said that scientific studies are outstripping scientists’ ability to convert them into medicines. He said the advancement are happening faster than ever because of researchers’ increased ability to find genetic variants that predispose people to diseases, their ability to edit the genome in living cells and their ability to create animal models that more closely mimic human biology.

“To speed the development of therapies for patients, both academia and industry — across pharma and finance — need to change the way we think and work together,” Golub wrote. “The answers do not lie in academia or industry alone. Only by collaborating more closely with all private sector partners will we uncover them.”

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Under the terms of that partnership, any profits from successful drugs or therapies funded in the collaboration will go to Deerfield’s philanthropic arm to support healthcare projects for those in underserved communities and healthcare innovation.

Deerfield Management ran afoul of federal securities regulators earlier this year, agreeing to pay $4.6 million to the Securities and Exchange Commission in August to settle charges that it “failed to establish, maintain, and enforce policies and procedures reasonably designed to prevent the misuse of inside information, including information about confidential government decisions,” the SEC said.


The charges followed an insider trading case involving several of its analysts in which they were accused of allegedly trading on “tips of nonpublic information about government plans to cut Medicare reimbursement rates,” the SEC said.

The case, though, dates to 2012 and 2013 and has nothing to do with its effort to fund research.

At Hopkins, a joint steering committee will identify projects that will receive funding during pre-clinical development. This is the basic research and studies that help qualify a drug or therapy for the human trials necessary to win government approval.

The research will cover a wide range of medical conditions.

“The most important thing is that it is addressing an important unmet medical need,” Flynn said. “We are going to focus on things that can really have a major impact.”