The past two years have seen a series of fascinating and strange experiments with a (maybe) innovative organizational structure: decentralized autonomous organizations, or DAOs. A new startup thinks the structure is perfect for tackling one of the thorniest problems in biotech: funding research into rare diseases.
DAOs were conceived as early as 2015 as largely automated entities executing business logic on the blockchain – hence the “autonomous” tag. That sci-fi goal is still in the future, but in the meantime DAOs have instead become a much more human-centered collaborative structure, leveraging the speed and access of cryptocurrency networks to both gather and deploy capital from large, scattered groups of people. Often, those are for altruistic or social purposes, including projects for Ukraine relief and the notorious ConstitutionDAO, respectively.
One biosciences veteran says DAOs are the perfect structure for addressing the skewed incentives around rare diseases.
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“A biotech or pharma company has a wealth of technology that can be applied to any number of diseases,” says Alok Tayi, founder and head of a new DAO-inspired biotech initiative, Vibe Bio. “But [big pharma companies] focus on the largest diseases they can pursue with that technology. An organization has to focus on the top one or two to maximize [investor returns].”
Vibe Bio wants to change the incentive structure by attracting patients and families directly affected by rare diseases into the drug funding and research process. For Tayi, it’s a deeply personal mission. He spent 16 years as a lab researcher before becoming a biotech entrepreneur. And he has all-too direct experience with rare diseases.
“Unfortunately, our daughter was born very sick, and spent a lot of time in the hospital suffering,” he said. “One of the facets of being in the NICU [Neonatal Intensive Care Unit] with a sick loved one is that you end up spending time with other families with sick loved ones, including many suffering from rare diseases.”
“The obstacle for all of us was that there wasn’t the funding to advance research. The challenge in finding a potential cure is not finding it, it’s funding it … Many of these families are relegated to either the generosity of billionaires or running a bunch of bake sales.”
Further, Tayi said, just because such research isn’t economical for a hulking conglomerate doesn’t mean it’s inherently unprofitable.
“Rare diseases, though the patient population is small, the economic opportunity is still there,” said Tayi. “Your costs are substantially lower because you don’t need thousands of patients” to conduct studies, for instance.
That means the effort could become sustainable over the long term.
“We want to make sure whatever capital is put to work … [the returns] go back to the treasury to be reinvested,” said Tayi.
Broadly, Vibe Bio proposes a much more bottom-up approach to funding and choosing research targets. It has raised an initial $12 million seed round from 6th Man Ventures, angel investor and prescient COVID-19 forecaster Balaji Srinivasan and others to fund preliminary legal and organizational work. But Vibe aims to build an unusually broad community of patients, researchers and advocacy groups who would help drive research decisions and perhaps drive or contribute funding through a Vibe token system.
For now, the starting point is patient advocacy groups, which already work to create visibility for rare diseases.
“[Groups] come to Vibe as part of our community,” said Tayi, “with proposals to fund a potential treatment. Then the scientific side of the community can then review those proposals for things like safety and regulatory protocols. Based on that review, those scientists can rank the proposals for funding.”
“Once the community has authorized capital for a particular proposal, we set up a C-corp that pursues [that project],” Tayi said. “That C-corp is jointly owned by the DAO and the [patient] advocacy organization. We believe the advocacy group to be a secret sauce. We want to give them unprecedented control over the development of a candidate medicine.”
Vibe Bio’s novel structure would also leverage the decentralization of bioscience itself over the past two decades. According to Tayi, biotech is becoming plug-and-play, or “virtualized,” in much the same way software development has.
“You can hire in executive staff for a particular biotech company to develop [a drug] or even build up a pipeline. In biotech, you can do that with a much leaner staff … You can have a dozen or even half a dozen people, who may or may not even be full time. This model has been proven out over decades.”
There are still some details to be determined, including precisely how communities will interact with Vibe Bio, the role of tokens and the overall legal structure. Tayi admits he and his legal team are still working through the nuances.
That’s because he started with a problem, then discovered a DAO could be the solution – rather than, as is too often the case, deciding to launch a DAO and then searching for a problem to fit the structure.
“We didn’t start Vibe because we’re passionate about DAOs,” Tayi emphasized. “The DAO became just a natural construct.”
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