JPMorgan Dad Starts Biotech in Muscular Dystrophy Quest
Ilan Ganot, a hedge fund banker at JPMorgan Chase & Co. (JPM), left his life in finance to create a new business model aimed at developing drugs more quickly. His son’s life may depend on his success.
Since his 2-year-old was diagnosed a year ago with Duchenne muscular dystrophy, a fatal genetic disease, Ganot quit his job in London, moved his family to the Boston area, raised $17 million and founded a biotechnology company.
Ganot, 40, a former Israeli army captain, is one of a generation of parents who are stepping in when medicine and industry don’t move fast enough to save their children. Instead of the usual approach of forming or supporting an advocacy group, Ganot is using his roots in finance to start a business aimed at getting treatments to market.
“He’s a really exceptional example of a parent who says, ‘I’m going to take my skills and apply them to this problem,’” said Sharon Hesterlee, vice president of research at Parent Project Muscular Dystrophy, a nonprofit focused on the disease. “You want them to solve world peace after this.”
Ganot would settle for making a difference in the disease afflicting his son, Eytani. There’s no cure for Duchenne muscular dystrophy, which occurs when the body fails to produce a protein called dystrophin that supports muscle fiber strength. DMD puts kids in wheelchairs before their teens and is often fatal in their 20s.
Ganot’s plan is for his new company to tackle the disease with a strategy he calls condition focus, a sole concentration on DMD. He seeks to fill a funding gap that can hold up promising projects in their early stages, tapping into his background in finance to speed up the notoriously slow and risky enterprise of developing drugs.
‘Center for Excellence’
“I am seriously focused, because I have one problem in my life,” Ganot said. “We’re going to become the center for excellence in DMD.”
He’s at the beginning of a quest to bring multiple drugs to market over the next decade for the disease, which affects about 20,000 newborns each year.
When Eytani was diagnosed, Ganot and his wife, Annie, started searching for options. Online, amid the devastating testimonials from other families, they found a scientific paper about the potential for stem-cell therapy to work against DMD. While the research was very early, it provided a first glimmer of hope that science might tackle the disease.
Ganot began reaching out to people who could provide insight on drug development. That led him to Andrea Ponti, JPMorgan’s co-head of health-care investment banking, who agreed to help.
“The first conversation I had with him was literally a week after his son was diagnosed,” Ponti, who is based in London, said in a telephone interview. “He said, ‘I’m in shock, but trying to figure out what to do, and the only thing I know how to do is raise capital. Do you think we could raise capital to cure this disease?’”
JPMorgan became an investor, and Ponti plans to serve as the bank’s representative on the board. “He has a lot of people rooting for him,” said Mike Cavanagh, co-chief executive officer of JPMorgan’s corporate and investment bank.
Ganot found partners with expertise in health-care and investing: Andrey Zarur, a life sciences venture capitalist, and Gilad Hayeem, former CEO of a European investment fund.
He named his company Solid Ventures -- solid is the English translation of Eytani’s name from Hebrew. In addition to JPMorgan, the company has attracted funding from private investors and a hedge fund, Perceptive Advisors, that’s also a large shareholder of Sarepta Therapeutics Inc. (SRPT), a publicly traded company based in Cambridge, Massachusetts, working on a drug for DMD.
Unlike with other parent-driven efforts -- such as the Spinal Muscular Atrophy Foundation, founded by former Goldman Sachs Group Inc. partner Dinakar Singh with almost $100 million of his own money -- Ganot’s investors expect a return.
He saw that potential when Sarepta amassed a market value of more than $1 billion with a muscular dystrophy drug still in the middle stages of clinical testing. That provided proof there was real investor interest in DMD, he said.
“It almost feels like his whole career was leading to this,” said Annie Ganot, 36. After also working in finance, she’s now focusing on the kids while Ilan works on the company.
In addition to Eytani, they have two daughters, Eliya, 5, and Alexy Lulu, 3 months. Neither of the girls has DMD; the disease is carried on the X chromosome, meaning it’s found mostly in boys. Annie isn’t a carrier, though; Eytani’s case arose from a spontaneous mutation.
One hurdle Ilan identified during his odyssey to understand drug development is a gap in funding that’s laid waste to countless promising projects. Basic research is generally funded by the government and patient advocacy groups, while compounds ready for late-stage clinical trials draw the attention of deep-pocketed pharmaceutical companies.
Between those two points is a period that can run for years, where risk is high and funding scarce. It’s referred to within the industry as the valley of death.
Primarily the domain of venture capitalists, it has been particularly worrisome recently. Venture investment in biotechnology has been slowing since the financial crisis, with capital raised in the first round of investment declining by about 35 percent from 2007 to 2012, according to EY, formerly known as Ernst & Young, an accounting firm.
Solid plans a diversified attack on DMD as a way to lower risk, Ganot said. Because the disease affects muscles throughout the body, different drugs are needed to treat its many symptoms. By working on several projects at a time, Solid is trying to avoid the binary scenario that can make or break young companies. That differentiates it from other startup drugmakers, which often are founded around one medicine or technology.
“From the financial industry’s perspective, diversification, portfolio theory and securitization are not new ideas,” said Andrew Lo, an economist at the Massachusetts Institute of Technology. He has published research on ways to make drug development more attractive to investors. With these techniques, “patients will have a better shot of getting treatment they desperately need.”
Solid plans to license or acquire promising projects from academic labs or other companies, move them through the earliest stages of testing with the help of contract research organizations, and ultimately partner or sell them to bigger pharmaceutical companies that can take them to market.
Though drug development becomes very expensive in its later stages, the $17 million Solid has raised will make a difference in moving along compounds that are pre-clinical or in the earliest trials, Lo said. The company already is in discussions with bigger drugmakers about potential partnerships, according to Ganot.
It will be several years before he’ll know whether his approach will work. On average, it takes more than $1 billion, including the cost of failures, and 10 years to get a drug to market, according to Pharmaceutical Research and Manufacturers of America, an industry lobbying group.
The DMD community has seen its share of setbacks. In September, GlaxoSmithKline Plc (GSK) and partner Prosensa Holding NV (RNA) failed to show their compound helped patients with DMD walk better in a clinical trial. Prosensa’s stock plunged 70 percent and Glaxo ended the partnership. Prosensa is still pursuing ways to get the drug to market.
Sarepta, whose medicine eteplirsen uses a similar technology, took a hit in November when it said U.S. regulators considered its plan to file for approval premature. The company plans to start enrolling patients in a confirmatory clinical trial this year, CEO Chris Garabedian said in an interview.
One risk Solid faces is Ganot’s personal stake in its progress. Eytani is an energetic and mischievous 3 1/2-year-old now and, as he gets older, the urgency to find treatments for him will only grow. Solid has put into place governance procedures that remove Ganot from decision-making in which he could have a conflict of interest, Zarur said.
His drive as a father, though, also works in his favor, adding a relentlessness other parents -- such as John Crowley, the CEO of Amicus Therapeutics Inc.-- have shown in efforts to develop treatments for their children.
“Unlike what may be the tendency of other founders or entrepreneurs, at least you know with me, if something doesn’t work, I’m not going to pursue it,” said Crowley, whose efforts to find a treatment for his kids with Pompe disease formed the basis of the movie “Extraordinary Measures.” “We’re going to get answers and get them as quickly as we possibly can.”
Crowley succeeded in getting a drug for his kids, though he points out it was an incremental advance and more work needs to be done. Ganot takes a similar approach.
“Am I going to save my son? I’m giving it my best shot,” he said. “I am definitely going to change the future for him, and all the boys with DMD.”
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