Crossing the valley

Finding a cure to cancer has a major funding obstacle and impact investing could be the answer.

While great developments have been made in diagnosis and treatment over the past generation, cancer remains a leading cause of death globally. The American Cancer Society estimates 21.6 million new cases of cancer annually by 2030, compared to about 14 million in 2012. At that rate, new cancer cases will be growing three times faster than the global population.1

Research's greatest obstacle

Finding new and better forms of cancer treatment is, and will continue to be, a global concern. And perhaps the greatest obstacle to developing new treatments is what researchers call the "Valley of Death." The phrase refers to the significant funding and resource gap that exists between basic oncology research and initial clinical trials – that is, the stage at which discoveries at a chemical level are turned into potentially viable treatments. Earlier this decade, this so-called translational research was receiving just USD 7–8 billion a year compared with basic medical research which received USD 22–23 billion while industry clinical development boasted USD 125 billion.2 Early stage research is critical as the first step to developing new drugs but the Valley of Death is only growing wider as investment in clinical developments for treatments that already exist are both lucrative and less risky.

Navigating the valley

It was facts such as those aforementioned that led UBS Global Wealth Management to start looking for answers. They quickly realized that no funds on the market were dedicated solely to oncology research, and that many clients had a strong desire to invest and contribute to finding a cure to various cancers. Meanwhile, a number of exciting developments in research were starting to take shape. Given the threat posed by cancer, the regulatory environment also evolved to accommodate easier development of treatments.

In 2016, in collaboration with Massachusetts-based investment firm MPM Capital, the now-closed UBS Oncology Impact Fund was born to fill a gap in both the investment market and the medical funding sector. The goals of the fund were clearly defined – to invest in early-stage cancer treatments, support academic research and provide better access to cancer care in the developing world.

But the fund was structured to create additional impact. In addition to its investments, the fund would give philanthropic donations. Through the UBS Oncology Impact Fund, 20% of the performance fee for the fund manager (MPM Capital) as well as 1% of royalties on treatments resulting from the fund would be donated to oncology research and cancer care access in emerging markets. As these donations come out of the manager's performance fee, investor returns would not be affected. Donations would be split in two, with half going to the American Association for Cancer Research (AACR) to support early-stage research and half going to UBS's Optimus Foundation to support emerging market cancer care.

The outcome

The UBS Oncology Impact Fund model was able to deliver successful performance quite quickly. UBS Wealth Management was able to raise USD 471 million from private clients. In 2018, after strong 2017 returns, the two-year-old fund made donations of USD 2.5 million collectively to the AACR and the UBS Optimus Foundation. Proceeds from future performance fees and royalties could go even further toward funding cancer research and care.

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Why it matters

SDGs addressed:

In September 2015, the United Nations set out a plan for transforming our world by 2030. The 17 Sustainable Development Goals (SDGs) are aimed at addressing the most pressing social and environmental challenges of our time. And we've committed to taking part in making them a reality.

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