Over the Last few months I have seen a number of JDFR press releases about their Industry Discovery & Development Partnership Program¹ (IDDP.)

As a proud supporter of JDRF’s efforts to find a cure I am typically happy to read of some strange sounding, very technical program, to address some specific cure avenue or therapy for living with type 1.

Unfortunately I am curious. That curiosity has been trained with a degree in finance and a few decades of reading the business news. I kept wondering about things like “Partnership,” “participation in value creation,” “collaborative relationship,” and the particularly interesting “up to a level of $5 million per program.” In short I wanted to know what the deal is.

So I scoured JDRF’s web page. I sent a request into their contact us link. I found and heard nothing to end my curiosity. Some time passed and another press release came out. This had an email for a contact at JDRF. So I emailed some fair but blunt questions.

• What is the relationship between JDRF and the for profit firm?
• It appears JDRF is acting as a source of venture funding, what returns are expected, contracted or required?
• What percentage of JDRF expenditures towards cures is involved?
• Where is there a statement about JDRF decision makers and conflicts of interest involving investments in these IDDP firms?

They didn’t email back answers - They set up a teleconference.

I did more homework.

I was very impressed and please with the candid answers they provided.

Among the key points we talked about are:

• JDRF has recognized that support is needed to transition academic discovery through the process of product development, trials and approval and into the daily lives of diabetic patents.
• The partnerships are for very specific issues, bringing a product through trials for example.
• These IDDP programs allow JDRF to help improve the quality of life for T1 families by encouraging movement of for profit firms into the market place with promising therapies.
• These agreement help focus entrepreneur talent to being research through trials and to market.
• The for profit partner must meet specific milestones to qualify to receive payments.
• The for profit must demonstrate a matching commitment to the partnership program.
• If the for profit chooses not to bring products to market based on the partnership, JDRF may use the intellectual property to bring products to market with others for profit firms.
• If products come to market as a result of the partnership, the for profit will return a portion of revenue from the product to JDRF, up to a negotiated multiple of JDRF’s research support of the program.
• This return of research funding is negotiated on a case by case basis. It is a means of continuing research funding for other promising projects related to JDRF’s mission.
• While at this time these partnerships represent a fraction of total JDRF research funding (approximately 10 to 15%) it is hoped they can have a positive impact on quality of life.
• JDRF treats these partnerships as it does other research funding. Specifically they are included as research support under program activities on JDRF's financial statement of activities. They are not broken out in JDRF's annual report.
• The partnership programs are held to the same JDRF mission standards as other research expenditures and are a means of supporting specific program that are directly related to JDRF’s mission.
• JDRF has specific ethical guidelines precluding conflicts of interest².

I was able to find a very detailed outline of one of the agreements in the 10K report of one of the IDDP companies.³ It was the full agreement redacted slightly to remove a few specific confidential items. From this and another firms annual⁴ report I found that the possible return of research funds was between 3 and 5 times the JDRF funding.

I was comfortable with the explanations JDRF provided. I appreciate their need to balance disclosure and information overload. While many people would be more confused by some of the information I read than enlightened, I think that it should be more readily available.

I would like to see JDRF’s financial statements break out IDDP funding from more traditional pure academic research. (I would also like to see the funding for both IDDP and academic research broken out into key JDRF mission goals, like; Beta cell replacement, Beta cell regeneration, Auto immunity, Complications, Artificial pancreas, etc.)

JDRF’s 2006 financial statement⁵ says that 167 million was spent on programs. That is 86 cents on each dollar contributed. Management and fundraising was less than 15 cents out of a dollar contributed. This is very good ration of programs to operations. Of the 167 million 131 went to research and 36 to public education. I am told that IDDP programs are bout 10 to 15% of the research expenditure. Like I said I would be happier to see that broken out.

I have seen enough financial hanky panky that I would like to see JDRF statement of financial ethics backed up with some kind of an independent confirmation of compliance, particularly where up to 5 million dollars per project is being advanced to for profit firms to speed bringing advanced technologies to our children’s care. To me work to a cure is too important not to have such ethical practices prominently stated and audited.

Bennet

Dad to two T1 kids.

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Useful Links and notes.

¹ JDRF IDDP Program
http://www.jdrf.org/index.cfm?page_id=103249
http://www.jdrf.org/files/Industry/handout%20industry%20doc.pdf

² JDRF Statement on Conflicts of Interest

http://www.jdrf.org/index.cfm?page_id=105584

³ Sangamo BioSciences, Inc. (Nasdaq: SGMO) SEC filings

http://phx.corporate-ir.net/phoenix.zhtml?c=120938&p=irol-SEC

⁴ Transition Therapeutics Inc. Financial Reports

http://www.transitiontherapeutics.com/ir/financials.php

⁵ JDRF Financial Statements

http://www.jdrf.org/index.cfm?page_id=100991