Health Care

Steve Pagliuca, others want to ‘turbocharge’ drug discovery with new Cambridge institute

A roughly $600 million founding investment from business leaders including Steve Pagliuca and Michael Dell is creating a new biomedical research institute in Cambridge’s Kendall Square.

The co-founders and investors announced the launch of the institute, called Arena BioWorks, on Friday morning. Pagliuca, co-owner of the Boston Celtics and former Bain Capital co-chair, told the Business Journal that the institute aims to form biotech companies by relying solely on a private funding model, which the co-founders believe will speed up drug discovery and company formation. 

Pagliuca said Arena has the “objective of bringing out life-saving therapeutics for good, but also with a profit motivation to try and make a return for investors.”

Arena is led by a management committee that includes CEO Stuart Schreiber, Harvard University scientist and Broad Institute co-founder; Tom Cahill, founder and managing partner of the life science venture capital firm Newpath Partners; and Pagliuca.

In addition to Pagliuca and Dell, founder and CEO of Dell Technologies, Arena has three other founding investors: Michael Chambers, founder and former CEO of Aldevron; Jim Breyer, founder and CEO of Breyer Capital; and Elisabeth DeLuca, a philanthropist, former nurse and the widow of Subway co-founder Fred DeLuca.

Cutting ‘red tape and bureaucracy’

The idea for Arena came out of the Covid-19 pandemic, which demonstrated to Pagliuca the benefits of cutting out the red tape from the drug discovery process. 

In 2020 Pagliuca partnered with the Massachusetts High Technology Council, healthcare leader and business executives to create return-to-work guidelines.

“We had a four-part recommendation, and one of them was to really turbocharge, to speed up therapeutics, vaccines,” Pagliuca said. 

After the initial Covid-19 waves subsided, Pagliuca said he met with scientists on the front lines of the pandemic to discuss how to learn from this crisis and develop drugs faster.

“A lot of the obstacles are red tape and bureaucracy,” Pagliuca said. “In university settings right now, they were estimating they spend close to 50% of their time on compliance… and then they’re spending 10%-15% of their time writing grants to get money. And then they’re spending 10%-15% of their time negotiating licenses to use the intellectual property.”

Pagliuca said he and others decided there must be a better structure to address these issues so scientists could spend 95% of their time on drug discovery.

A for-profit, private funding model

Arena’s approach to forming biotech companies is meant to upend the traditional model of grant-funded academic research and venture capital-funded startups.

Drug discovery and company creation will happen under one roof at Arena, although the institute may recruit external scientists and leaders for its companies. Arena will also provide shared leadership, equipment and space to support and build collaboration among its companies.

Arena isn’t prescribing a certain research focus for its scientists. The beauty of the private funding model, the institute said, is that scientists can investigate any disease area, not just those most likely to win funding through grants or venture capital. But, Arena said it would look to develop treatments for disease areas with high unmet medical needs for which there is a deep understanding of human pathobiology. Those disease areas include brain health, oncology, immunology and aging.

Pagliuca said the founding investors put in about $600 million total to the institute. They will allocate 20% of profits to go back into Arena, Pagliuca said, which should self-fund the institute for the next 50 years if all goes to plan.

“Arena’s single source of funding frees our scientists from the typical short-term cycles of grant and venture capital funding. Our aim is to accelerate progression from deep mechanistic human biology to biotech-enabled drug development,” Schreiber added in a statement.

Pagliuca said Arena will use a collaborative model, with scientists having a piece of all the companies. If a project isn’t doing well, Pagliuca said there will be flexibility to quickly funnel funding toward more promising research. 

“Our theory is, we’re going to allocate the money to the winners and we’re going to move on more quickly from the projects that aren’t working, and then redeploy people,” Pagliuca said.

Dr. Keith Joung, formerly of Massachusetts General Hospital and a leading figure in CRISPR gene editing, is among the new hires on Arena’s scientific team. 

Pagliuca there’s about 20 people on staff, and he expects that number to climb to around 150.