The billionaires are spending a fortune to lure scientists away from universities

In an unmarked laboratory stationed between the campuses of Harvard and the Massachusetts Institute of Technology, a splinter group of scientists is on the hunt for the next billion-dollar drug.

The group, funded with $500 million from some of the wealthiest families in corporate America, has caused a stir in academia by dangling seven-figure paydays to lure highly qualified college professors into a for-profit bounty hunt. Its self-proclaimed goal: to avoid the roadblocks and paperwork that slow down the traditional paths of scientific research at universities and pharmaceutical companies, and to discover dozens of new drugs (primarily against cancer and brain diseases) that can be produced and sold quickly. .

Start-up braggadocio is the norm, and many ex-academics have started biotech companies, hoping to get rich with their one big discovery. This group, rather boastfully named Arena BioWorks, borrows from a quote from Teddy Rooseveltdoesn’t have a single idea, but he does have a big checkbook.

“I make no apologies for being a capitalist, and that team motivation is not a bad thing,” said tech magnate Michael Dell, one of the group’s backers. Others include an heiress to the Subway sandwich fortune and an owner of the Boston Celtics.

The wrinkle is that for decades, many drug discoveries not only originated in colleges and universities but also generated profits that helped fill their coffers. The University of Pennsylvania, for example, has said it has made hundreds of millions of dollars for research into mRNA vaccines used against Covid-19.

Under this model, such a windfall would remain private.

Arena has been operating in stealth mode since early fall, before unrest over Israel and Gaza erupted at the universities it borders. Still, the impetus behind it, say researchers who rushed to the new lab, is only becoming more acute as the reputations of higher education institutions take a hit. They say they are frustrated by the slow pace and administrative problems at their former employers, and by what a new employee, J. Keith Joung, said was “horrendous” pay at Massachusetts General Hospital, where he worked before Arena worked.

“It used to be considered a failure to move from academia to industry,” says Dr. Joung, a pathologist who helped design the gene-editing tool CRISPR. “Now the model has been reversed.”

The motivation behind Arena has scientific, financial and even emotional components. The early backers first pondered the idea at a late 2021 confab at a mansion in Austin, Texas, where Mr. Dell, along with early Facebook investor James W. Breyer and a Celtics owner Stephen Pagliuca, presented their vented to another about the seemingly endless requests for money from collegiate fundraisers.

Mr. Pagliuca had donated hundreds of millions of dollars to his alma maters, Duke University and Harvard, much of it for science. That earned him seats on four advisory boards at the institutions, but it began to dawn on him that he had no concrete idea what all that money had yielded, apart from his name on a few plaques outside various university buildings.

Over the next few months, these early backers worked with a Boston venture capitalist and trained physician, Thomas Cahill, to devise a plan. Dr. Cahill said he would help find frustrated academics willing to give up their hard-won university tenures, as well as scientists from companies like Pfizer, in exchange for a big cut of profits on the drugs they discovered. Arena’s billionaires will keep 30 percent, while the rest will flow to scientists and overhead.

For-profit science is, of course, nothing new; the $1.5 trillion pharmaceutical industry provides ample evidence. Businessmen like Jeff Bezos and Peter Thiel have poured hundreds of millions of dollars into startups trying to extend human life, and many pharmaceutical companies have raided universities looking for talent.

A significant percentage of medicines come from government or university subsidies, or a combination thereof. From 2010 to 2016, each of the 210 new drugs approved by the Food and Drug Administration was connected to research funded by the National Institutes of Health, according to the scientific journal PNAS. A 2019 study from a former dean of Harvard Medical School, Jeffrey Flier, said that most of the “new insights” into biology and disease came from academia.

That system has long-standing advantages. Universities, typically helped by their nonprofit status, have a virtually unlimited, low-paid supply of research assistants to help scientists with early-stage research. Groundbreaking drugs have emerged from this model, including penicillin.

The problem, scientists and researchers say, is that approval from university institutions to move forward with promising research can take years. The process, aimed at filtering out unrealistic proposals and protecting security, can involve writing lengthy essays that can take up more than half of some scientists’ time. When funding is secured, the original research idea is often already outdated, triggering a new cycle of grant applications for projects that will certainly be outdated in time.

Stuart Schreiber, a Harvard researcher who quit as Arena’s chief scientist, said his more profound ideas rarely received support. “It got to the point where I realized the only way to get funding was to apply to research something that had already been done,” said Dr. Schreiber.

The cachet of Dr. Schreiber – he is a pioneering chemical biologist in areas such as DNA testing – has helped attract almost 100 researchers to Arena. Harvard declined to comment on his departure and that of others he helped lure.

There is an air of calculated secrecy surrounding Arena’s activities. Dr. Joung, who resigned from Mass General last year, said he had not told former colleagues where he was going, and that several people had asked if he was terminally ill. Dr. Cahill said that several scientists he hired had their university email access quickly disabled and faced stiff legal threats of retaliation if they tried to recruit former colleagues — a common phenomenon in the business world that has come to be seen as brass knuckles applies.

The five billionaires backing Arena include Michael Chambers, a manufacturing titan and the richest man in North Dakota, and Elisabeth DeLuca, the widow of a founder of the Subway chain. They have each invested $100 million and expect to double or triple their investment in later rounds.

In confidential materials provided to investors and others, Arena describes itself as “a privately funded, fully independent, public asset.”

Arena’s donors said in interviews that they had no plans to completely stop their donations to universities. Duke turned down an offer from Mr. Pagliuca, an alumnus and board member, to set up part of the laboratory there. Mr. Dell, a major donor to the University of Texas hospital system in his hometown of Austin, leased space there for a second Arena laboratory.

Dr. Schreiber said it would take years — and billions of dollars in additional funding — for the team to find out whether his model would lead to the production of valuable drugs.

“Is it getting better or worse?” said dr. Schreiber. “I don’t know, but it’s worth a try.”

Audio produced by Patricia Sulbarán.