IP-NFTs for Researchers: A New Biomedical Funding Paradigm
TL;DR: This week, the first university biomedical intellectual property (IP) and research project was funded as an NFT (non-fungible token), enabled by a pioneering innovation at Molecule.
This week marked the start of a new era for research fundraising — for the first time ever, biopharma research and its corresponding intellectual property were funded as an NFT. A DAO now owns this IP, the rights to future data, and is funding pioneering longevity research at the Scheibye-Knudsen Laboratory & University of Copenhagen.
This is also an important moment for NFTs, with the creation of a new standard:the IP-NFT. IP-NFTs represent full legal IP rights and data access control to biopharma research. More importantly, they represent the heralding of an entirely new asset class: virtualised IP.
A GIANT leap for decentralized research was made today 🧬For the first time, real-world biopharma research and IP was transferred and funded on-chain as an NFT via @Molecule_to@Nevermined_io@vita_dao A DAO now owns IP and funds biotech research at a leading lab... 👇1/🧵— Paul Kohlhaas (@paulkhls) August 17, 2021
With IP-NFTs, biomedical researchers, TTOs, and biotech companies can:
Fundraise commercially without needing to patent early or create a startup
Engage stakeholder groups like patients directly, collaborate with other researchers to promote open science, and get attention through a public marketplace
Collaborate on research tasks utilising data access control
Create new funding/monetisation strategies that take advantage of data marketplaces
So what does this mean for researchers and funding more broadly? In this article, we will dissect these topics with a deep dive into the biopharma funding landscape, how it is evolving, and how researchers can become a part of the next revolution in biomedical research funding.
Research — and the eternal quest for funding
About the author
Tyler Golato
I am a scientist, founder, investor, musician, and visual artist - mainly a curious person struggling to balance my interests. Currently, I work as a partner at Triplicate, an early-stage investment firm promoting the deinstitutionalization of science. We are interested in supporting teams that accelerate independent scientific discovery.
Most researchers would agree that funding (alongside publishing) is a defining aspect of their professional existence. Often, after a decade of training, biomedical researchers who seek a productive career in academia spend a substantial portion of their time trying to attract funding. To emphasise this point, a recent study showed that amongst a cohort of 285 biomedical researchers in Australia, an estimated 550 working years of their time was spent preparing proposals. It also showed that preparing a new grant proposal takes an average of 38 working days of researcher time.
A researcher’s ability to do so dictates the success of their laboratory and further, the path of their career. This funding can come from a variety of sources, but the most prominent sources are grants funded by taxes (for example, NIH grants in the US). While these sources of funding are often large and consistent, they are difficult to attract and take a long time to deploy. The award rate of NIH grants is less than 20%.
Success rates of applicants for R01-equivalent awards, by career stage of investigator.
The Valley of Death in Biopharma
Grant funding of this nature is suitable for basic research and non-commercially oriented work. In drug development however, when a therapeutic is discovered, or research becomes more akin to product development, the source of funding must change. This is a critical inflection point where innovation often fails, and it is colloquially referred to as the “valley of death”. This is the point where no-strings-attached funding fails to link up with profit-motivated funding to turn a recent discovery into a product on the market. Surprisingly, one of the largest valleys of death lies around our world’s universities. A huge percentage of discoveries made at universities go unutilised, significantly increasing the time until highly anticipated new treatments make it to market, if they reach it at all.
The Translational “Valley of Death” in Biopharma.
Funding and Commercialisation Bottlenecks
Let’s recap this to fully understand the process. Tax money funds early-stage research in the form of grants. These grants are utilised by researchers to get to the point of developing a potentially life-saving therapeutic. At this point, the technology is often patented, and moved into the holding of a tech transfer office (TTO). In a best case scenario, that technology is out-licensed to a pharmaceutical company and the remainder of the development carries on there. Thus, a public good transitions into a commercial ecosystem where private interests monopolise it. The public spends a substantial amount of money indirectly subsidising pharmaceutical development, to then have a technology taken private and resold to them downstream at a tremendous markup (often referred to as “pay twice”). And this is the best-case scenario. In many cases, the technology fails to be out-licensed, the patent clock ticks, and eventually, the technology withers on the vine, failing to attract its development requirements and never reaching the market, or in the case of drug development, patients.
There is another option for researchers and that is to start a company. Many academic researchers however, do not see themselves as entrepreneurs and do not wish to leave their academic posts. Their heart is at the lab after all, rather than in the meeting room
Further, much of academic research suffers from discoverability issues. It is often challenging for the demand side of the funding equation to find the right projects, and vice versa. When there is a supply side (research project) and demand side (investor) match, often the challenges of due diligence, legal, and valuation create another group of obstacles that often proves insurmountable.
We need stronger alternatives for funding and advancing drug development at universities, and bridging the valley of death. Further, we need an active and involved public — the ultimate beneficiaries of these technologies — to play a stronger role in guiding their development.
But how can we enable patients and the public to fund, govern, and own research directly? How can we make IP a more transactable and liquid asset class to generate the funding needed?
The IPNFT
Non-fungible tokens (NFTs) seem to have exploded out of the ether this year. In the context of the creative industry (mostly art and music), these assets are selling at unprecedented prices. OpenSea, one of the most popular NFT trading platforms, recently passed $1b in volume. The NFT space has been divisive in some ways, but most would agree that the space has been instrumental in helping to usher in a “creator economy”, transferring power away from middlemen and towards creatives themselves. What if a similar revolution was possible in biomedical research — a creator economy for scientists.
While NFTs have gained a lot of publicity related to art, much of the early interest around NFTs related to moving real-world assets on-chain. Molecule has been exploring a use case for combining IP and NFTs with DeFi in 2018, and this week, that use case was fully realised.
Thumbnail for the first IP-NFT, representing a longevity research project from Morten Scheibye-Knudsen at The University of Copenhagen.
Image associated with the first IP-NFT.
In a historic transaction, the first biopharma IPNFT was successfully transferred to a research collective, VitaDAO, to fund novel longevity therapeutics at the University of Copenhagen. And this is just the beginning.
First IP-NFT transaction on Etherscan.
Over time, Molecule aims to build a full-fledged funding ecosystem for early-stage research discoveries. Molecule aims to become an OpenSea of biotech IP, powering a new creator economy for researchers that allows for the rapid funding, discovery, and development of therapeutics through globally connected patient collectives. We believe this system will be equally beneficial to the current pharma industry as it will be for patients: by decentralising access and helping discover promising research more quickly.
How will this IP-NFT marketplace work? In brief, it allows the IP to enter Web3. If Web1 is the information layer (think Google), and Web2 is the communication layer (think Facebook and mobile), then Web3 is the monetisation layer that connects Web1 and Web2. Minting IP as an NFT enables the IP to be financialised — it can be held by a DAO, tokenised, have a liquid market created around it, collateralised, and borrowed against. As an example, one can program funding events into the NFT such that every time someone buys it, X% can go to the inventor. All of these financial tools that either never existed before or that were restricted to sophisticated institutions are now available at everyone’s fingertips thanks to Web3 and DeFi technology. IP-NFTs are also particularly valuable for pre-patent IP such as data, which for all intents and purposes have no market. As an example of this scenario, one can attach a license for future IP rights to a NFT.
An IP-NFT can also be used as an alternative to a patent early on by enabling the protection of data through secure federated data storage, which the NFT unlocks. In this scenario, every time the data is accessed, this can be transparently viewed — its history and ownership record is known and stored on-chain (i.e., on the blockchain, which in VitaDAO’s case means the Ethereum blockchain). Lastly, by making the IP programmable, the IP is more discoverable. This is particularly useful for academic data where there is no efficient way to find it. Programmability also helps create more modular legal contracts.
From the researcher’s perspective, this means that they have an entirely new way to get funded — one where they maintain autonomy, and where a community can directly support them and interact with their research. They can now mint IP-NFTs of their work, and these can be purchased and funded by those that are directly interested in supporting them. Ideally, these purchasers and funders will be DAOs and communities. These communities, like those emerging around VitaDAO, are interested in interacting with and directly supporting research. Instead of a grant agency or a company, the funding source becomes a network of enthusiastic people who want to engage and learn about the mission. This paradigm shift will completely change the way that biomedical research is funded and advances.
Recap: What the IP NFT can do for you
Fundraise commercially without needing to patent early or create a startup.
Engage stakeholder groups like patients directly, collaborate with other researchers to promote open science, and get attention through a public marketplace.
Collaborate on research tasks utilising data access control and bounty systems.
Create new funding/monetisation strategies that take advantage of data marketplaces.
Conclusion and Outlook
The IP-NFT revolution formally kicked off this week in a historical first that will likely change the way biomedical research is funded forever — for the first time, a DAO focused on advancing longevity therapeutics is funding pioneering longevity drug development at a leading university, with full ownership rights to the IP and data generated via an NFT. The scientists working on this project now have a community to actively engage, one that is fully aligned with their vision and mission. And this is just the beginning.
Molecule is eager to help researchers, labs, biotechs and universities around the world that wish to work this way — particularly, those daring enough to try new things and herald a new era of innovation. We imagine a future where communities and DAOs thrive as key pieces of the biomedical funding infrastructure, and researchers take advantage of decentralised funding opportunities by simply minting their research to IPNFTs. This is a paradigm shift — one towards decentralised, community-focused drug development that allows anyone interested the right to participate. This is the future of biomedical research.
Keen to connect and learn more, discuss or try this approach?
Join our Discord to interact directly with our team.
Email me at tyler@molecule.
Thank you to Molecule, Nevermined, VitaDAO, Tim Peterson, Clemens Ortlepp, Lisa Schwarz, and Paul Kohlhaas for your pioneering work and help with this article.
