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Journal Of Investment Management, Vol. 14, No. 4, (2016), pp. 87–101

© JOIM 2016

C A S E S T U D I E S

“Case Studies” presents a case pertinent to contemporary issues and events in investment man-agement. Insightful and provocative questions are posed at the end of each case to challenge thereader. Each case is an invitation to the critical thinking and pragmatic problem solving that are sofundamental to the practice of investment management.

BUSINESS MODELS TO CURE RARE DISEASE:A CASE STUDY OF SOLID BIOSCIENCES

Esther S. Kima,b and Andrew W. Loa,c,d,e,∗

Duchenne muscular dystrophy (DMD) is a rare genetic disorder affecting thousands ofindividuals, mainly young males, worldwide. Currently, the disease has no cure, and isfatal in all cases. Advances in our understanding of the disease and innovations in basicscience have recently allowed biotechnology companies to pursue promising treatmentcandidates for the disease, but so far, only one drug with limited application has achievedFDA approval. In this case study, we profile the work of an early-stage life sciencescompany, Solid Biosciences, founded by a father of a young boy with DMD. In particular,we discuss Solid’s one-disease focus and its strategy to treat the disease with a diversifiedportfolio of approaches. The company is currently building a product pipeline consistingof genetic interventions, small molecules and biologics, and assistive devices, each aimedat addressing a different aspect of DMD. We highlight the potential for Solid’s businessmodel and portfolio to achieve breakthrough treatments for the DMD patient community.

aMIT Laboratory for Financial Engineering, Sloan Schoolof Management, Cambridge, MAbMIT Technology and Policy Program, Cambridge, MAcMIT Computer Science and Artificial Intelligence Labora-tory, Cambridge, MAdMIT Department of Electrical Engineering and ComputerScience, Cambridge, MAeAlphaSimplex Group LLC, Cambridge, MA∗Corresponding author. E-mail: [email protected]

1 Introduction

Drug development is a risky and costly endeavor,requiring more than 10 years and $2.5 billionfor a single successful candidate to reach themarket (DiMasi, 2014). The process is capital-intensive, each milestone on a drug candidate’stimeline requiring millions of dollars for such

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88 Esther S. Kim and Andrew W. Lo

items as discovery, animal model studies, clini-cal trials, regulatory filings, and marketing andsales. As a result, biopharma companies havegenerally focused on developing assets for lucra-tive and usually large markets (Pammolli et al.,2011). In recent years, however, policy incentivesand strong opportunities for commercializationhave driven biopharma companies to increaseresearch and development for rare and orphandiseases (Meekings et al., 2012), which affectsmaller populations, but present significant unmetmedical needs.

Historically, orphan and rare diseases, defined bythe FDA as diseases with fewer than two hun-dred thousand cases in the U.S., have largely beenneglected, since drug developers have had littleincentive to develop treatments for few patients.Currently, 7,000 of these rare diseases affect atotal of 30 million individuals in the U.S. (FDA,2016a). In 1983, congressional legislation createdthe FDA’s Orphan Drug Designation, which givesincentives to orphan drug developers to developtreatments for rare diseases. Since then, the num-ber of approved orphan and rare drug treatmentshas grown significantly, with more than 550products on the market since the passage of thelegislation (FDA, 2016c). Despite this progress,developers of drugs for rare diseases (now includ-ing big pharma and biotechnology companies)still face significant scientific and financial risks,and many rare diseases still present significantunmet needs. Among the diseases still without aproven and effective U.S.-approved treatment isDuchenne muscular dystrophy (DMD), a fatal andrare genetic disease with an incidence of approx-imately 1 in 5,000 males, primarily among youngboys, worldwide (Hoffman and Connor, 2013).

In recent years, the FDA has announced the pos-sibility of accelerated approval for DMD drugcandidates. This is an attempt to create incen-tives and stimulate development of therapies for

the DMD patient population. The extended DMDcommunity has been waiting for a treatment fordecades (FDA, 2014). Recently, there has beenan increase in momentum in DMD drug devel-opment, with a handful of companies activelydeveloping treatments for DMD patients. The per-sistent involvement and advocacy of the DMDpatient community underscores the urgent needfor a successful treatment.

This need is still unmet. In the past year, the FDAhas rejected initially promising drug candidatesfrom PTC and BioMarin, candidates that had beenchampioned by the DMD patient community. Ina recent victory for the community, however,Sarepta, another company working on DMD drugdevelopment, has gained accelerated approvalfrom the FDA for its drug, eteplirsen, whichtargets approximately 13% of DMD patients.Nevertheless, the company must continue to runstudies to show the safety and efficacy of the drug,and the approval may be subject to withdrawalbased on further findings.

In this case study, we discuss the work of onelife sciences company, DMD-focused Solid Bio-sciences, founded by the parents of a young boywith DMD. This young company has achievedseveral promising early successes. We high-light its unique business model and its potentialto achieve further breakthroughs in developinglong-awaited DMD treatments. Specifically, weemphasize Solid Biosciences’ one-disease focusand modality-agnostic approach to developingdrug candidates for DMD. We analyze the poten-tial of this model to mitigate the challengesassociated with drug development and success-fully bring to market treatments for patients withrare diseases.

2 Background

Rare and orphan diseases are defined by the FDAas those that affect fewer than 200,000 individuals

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Business Models to Cure Rare Disease 89

in the United States. Starting in 1983, congres-sional legislation has created policy mechanismsto accelerate innovation and development forrare diseases with target populations too small tofinancially justify large research and developmentprograms. Through this legislation, the OrphanDrug Designation was created, which providesseven years of market exclusivity for the firstdeveloper to achieve approval for a candidate.Since the legislation was enacted, more than 550orphan drugs have been approved (FDA, 2016c),compared to just 10 from 1973 to 1983 (FDA,2016b). Companies that have developed thesedrugs have done quite well during the exclusivityperiod (Meekings et al., 2012), offering an attrac-tive investment for investors and the biopharmacompanies that develop the drugs. While someof the candidates that fall under this category arenovel, others are part of partially developed assetprograms that had been previously shut down,or are candidates initially developed for otherindications.

Despite the success of the Orphan Drug Designa-tion, there are still many untapped opportunitiesin drug development, particularly for rare andorphan diseases. Declining research and devel-opment activity in the pharmaceutical industryhas resulted in many promising early-stage can-didates that fail to advance to the clinic for furtherstudy, let alone to patients. Because of the signifi-cant cost and time required for drug development,investors are more likely to fund later-stage assetsthat have achieved proof of concept, or thoseassets that have the potential to become block-buster drugs. Meanwhile, mergers and acquisi-tions in the pharmaceutical industry have becomeincreasingly common, and large biopharma andbiotech companies often acquire the early work ofsmaller biotech companies that do the early devel-opment and “de-risking” of assets. With pharma-ceutical companies losing significant value due tostagnant R&D productivity (Garnier, 2008) and

investors averse to early-stage assets, there is asignificant lost opportunity in the development ofpotential therapies for patients. However, recenttrends show that the pharmaceutical industry isexperiencing economically favorable returns withorphan drugs (Meekings et al., 2012) and, as aresult, unaddressed rare and orphan indicationsoffer a potentially lucrative area for future drugdevelopment.

2.1 Duchenne muscular dystrophy

Duchenne muscular dystrophy is a severelydebilitating muscle disease caused by a geneticmutation on the X chromosome, resulting in thelack of dystrophin, a protein that is critical forestablishing muscle stability (Fairclough, 2013).Currently, there is only one approved treatmentfor a small subset of DMD patients and no curein the United States for this rare disease, whichdisproportionately affects young boys (and inrare cases, girls). The current standard of careinvolves palliative options and the use of steroids,which result in significant side effects in children.Despite its classification, DMD is one of the moreprevalent “rare” diseases in the U.S., and placesa significant disease burden on families, commu-nities, and the healthcare system. The disease isfatal in all boys, most requiring wheelchairs byage 12 and dying due to heart failure or respiratorydifficulties in their twenties (Fairclough, 2013).It is estimated that approximately 10,000–15,000boys suffer from DMD in the U.S., translating toa national economic burden of nearly $500–800million annually (Larkindale et al., 2014).

3 Company history

Solid Biosciences is a private life sciences com-pany based in the Kendall Square biotech hubin Cambridge, Massachusetts. The company wasfounded by Ilan Ganot, Gilad Hayeem andAndreyZarur soon after Ganot’s son was diagnosed with

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Figure 1 Key company milestones.

DMD in 2012. The company’s name, Solid, isthe English translation of his son’s Hebrew name,Eytani.

As a parent, Ganot was frustrated with the lackof progress in DMD drug development, but asSolid’s future CEO, he also saw a commer-cial opportunity for a new company that wouldaddress this unmet medical need. Prior to found-ing Solid, Ganot had been an investment bankerwith JPMorgan Chase, and had years of expe-rience in corporate finance and structuring deals.The early Solid team considered a range of optionsfor making a contribution to DMD research anddevelopment, from creating a nonprofit organi-zation to establishing an investment firm, beforeultimately deciding that a hands-on drug devel-opment company would maximize its impact onthe DMD population. With that, Solid’s currentbusiness model was born.

Soon after founding Solid, Ganot discovered thatmany pharmaceutical companies and academicinstitutions had promising early-stage investi-gational candidates for DMD that had stalledin development. Ganot and his first hire, JoelSchneider, a former graduate student in DMDresearch, now a director of Solid’s research anddevelopment program, reviewed the landscapeof DMD assets for potential breakthrough appli-cations, including gene therapy. The companyultimately decided to in-license intellectual prop-erty for a gene therapy candidate for DMD. Soon

after, Ganot convened a conference with manyof the major DMD researchers working on genetherapy in the U.S., leading to some of Solid’sfirst academic partnerships.

Since its founding in 2013, Solid has establisheditself as a center of excellence for DMD researchand drug development. It currently operates fourplatforms: Assistive Devices, currently develop-ing the Solid Suit, a DMD assistive device; Dis-ease Modifying Therapies, for biologic and smallmolecule assets that address the multiple sec-ondary disorders that result from DMD; DiseaseUnderstanding, which strives to use biomarkersto improve diagnoses and the understanding ofthe impact of therapy; and Corrective Therapies,which includes its gene therapy platform underthe company’s subsidiary, Solid GT.

4 Company funding and operations

Based on its proposed business plan and itsarticulation of an unmet need in DMD, Solid Bio-sciences was able to raise $17 million in its SeriesA fundraising in 2013. A critical early backer ofSolid was JPMorgan, Ganot’s employer at thetime he learned of Eytani’s diagnosis. JPMor-gan invested $5 million into the Series A roundfor Solid, and it currently holds a seat on Solid’sboard of directors. In addition, Gilad Hayeem,one of the company’s cofounders, and currentboard member Matthew Arnold, each invested



in the round. The two are currently the biggestindividual shareholders of the company.

The backing of JPMorgan was critical in Solid’searly stages. It was an uncharacteristic step for thefinancial services firm, which does not typicallyparticipate in one-off venture investing, let alonein an employee venture. However, JPMorganwas preparing for the IPO of a biotech com-pany also working on DMD, and thus understoodthe business opportunity and its unmet medicalneed. Furthermore, Ganot’s story had percolatedwithin the company and received internal support,including from JPMorgan’s CEO, Jamie Dimon.The investment did not fall neatly inside JPMor-gan’s existing lines—not in the bank’s charitableinvesting unit, its impact investing department, orits private investments. Nevertheless, the firm’ssenior executives believed investing in the causewas the right thing to do, and rallied behind Ganotand his family. Over the course of nine months,the details were ironed out and due diligence wascompleted, allowing JPMorgan to lead the firstfinancing round.

One key early decision at Solid was to divedeep into gene therapy for DMD. Solid GT, aSolid Biosciences subsidiary, was formed, andin December 2014, a Series A round was com-pleted. This complemented Solid Bioscience’s $5million of investment with an additional $5 mil-lion of capital, which was invested in return forequity ownership of Solid GT by three promi-nent U.K.-based DMD charities: DMD ResearchFund, DMD Children’s Trust, and Joining Jack.This partnership with DMD-focused organiza-tions was instrumental in providing a promisingstart for Solid GT. Each organization, in addi-tion to its capital, was able to provide expertise,leadership, and a keen sense of urgency.

In November 2015, Solid GT closed a $42.5million Series B round, led by the investmentfund Perceptive Advisors, which focuses on

healthcare, and by the biotechnology companyBiogen, to continue development of its CorrectiveTherapies platform. Unlike Solid Biosciences’first round of fundraising, the management teamwas able to raise money for Solid GT based onthe progress of its scientific work, specifically, thepromising preclinical data for its lead gene ther-apy candidate, SGT-001. Executives from Biogenand Perceptive Advisors have since joined theSolid GT Board of Directors.

4.1 Company management

Solid Biosciences is an operating company, nowwith more than 25 employees, which overseesfour platforms, Disease Modifying Therapies,Assistive Devices, Disease Understanding, andCorrective Therapies, the last of which is heldwithin Solid GT, a formal subsidiary of the Com-pany. The platforms encompass Solid’s work insmall molecules and biologics, assistive devices,biomarkers, and genetic interventions, respec-tively. The company operates under its CEO andmanagement team, with active and regular par-ticipation by its board members. Ganot, the CEO,runs the day-to-day operations of the company.Gilad Hayeem, currently a Solid board mem-ber and its president, also runs the investmentmanagement firm Waverly Capital, based in NewYork City. Andrey Zarur currently serves as thechairman of the Solid Biosciences board. Busi-ness decisions and activities are initiated by themanagement team, and are reviewed by the man-agement boards. Currently, there is a dedicatedBoard of Directors and Scientific Advisory Boardfor Solid’s subsidiary, Solid GT, in addition to

Figure 2 Company structure.



the Board of Directors for the umbrella company,Solid Biosciences.

5 The Solid portfolio

Solid’s complete focus on understanding DMDgives it a unique edge when considering potentialasset acquisitions and licenses. The manage-ment team naturally looks at groundbreakingscience, commercial potential, and the likeli-hood of clinical success. However, the mostimportant factor for Solid is that the sciencemust have the potential to be translated into atherapy for DMD patients. A central tenet ofSolid’s strategy is that if Solid focuses on the sci-ence with the most potential in DMD, financialreward will follow. In addition, because Solid ismodality- and technology-agnostic, it is not tieddown to any particular class of asset or scientificapproach. This method has allowed the companyto make quick shutdown decisions when data wasunpromising or not indicative of future clinicalsuccess.

In general, when evaluating potential assets, Solidleverages its scientific expertise in DMD to pursuepeer-reviewed research initiated and conductedby leading DMD researchers in the field. In addi-tion to its business analysis of an asset (includingthe potential target market), the Solid team favorsassets that have shown promise in animal models,or better still, that have promising human data.Because animal models are not perfectly indica-tive of an asset’s performance in humans, poordata from animal studies is not necessarily a dealbreaker, if the scientific advisory and manage-ment team feels that there is potential efficacy forDMD patients.

Solid is able to make holistic decisions aboutassets. Key to this process is the expertise ofthe advisors, clinicians, and experts on Solid’sadvisory board, who help to reduce risk when themanagement team is considering potential assets

and making important decisions. Solid’s focus ona single disease has attracted a strong communityof scientific and clinical experts, which providesSolid with a key strategic advantage in developingits portfolio of candidates.

Solid’s strength is its ability to focus its assetreview on DMD alone. Because it knows thespace and competitive landscape so well, Solidis able to avoid redundancy. While the com-pany still actively researches and pursues poten-tial in-licensing opportunities, Solid is now onthe receiving end of licensing offers from otherresearchers and companies who are familiar withits work and focus on DMD.

Solid outsources research and development, help-ing to manage offsite labs, largely at academicresearch centers. Solid not only funds these labs,but also strategizes and thinks through scientificdecisions with them, bringing its DMD exper-tise to the table. In alignment with its strategyof being modality-agnostic, Solid has a portfolioranging from genetic intervention and secondarydisorder management to Solid Suit, an exoskele-ton device for children with DMD to wear. Asof 2016, Solid’s assets are all in the preclinicalstage, and represent a diverse range of potentialsolutions for DMD patients.

5.1 Corrective therapies and Solid GT

Through its Corrective Therapies platform, Solidis pursuing therapeutic approaches that addressthe underlying cause of the disease to benefit asmany DMD patients as possible. The company’sbiggest bet in this effort is the application of genetherapy to replace the defective gene responsiblefor DMD. Gene therapy was first shown to workin patients with melanoma in 1990 (Collins andThrasher, 2015), but it still has not been approvedin the U.S.



In 2016, the European Medicines Agency (EMA)approved its second gene therapy, used for thetreatment of a rare metabolic disorder, ADA-SCID, for the European market (Mullard, 2016).While gene therapy is still in its infancy, with chal-lenges ranging from gene delivery in patients tomanufacturing and production, Solid Biosciencessees recent advances in methods in the biotechnol-ogy industry as bringing about the “third wave”of gene therapy efforts.

Solid Bioscience’s subsidiary, Solid GT, has madeprogress in Corrective Therapies for DMD. Thusfar, it has been involved in successful preclinicalanimal studies of its lead gene therapy candidate,SGT-001. The data from these studies has helpedSolid GT raise approximately $50 million foradditional development, and the company plansto initiate clinical trials for SGT-001 in 2017.Significant challenges still remain for gene ther-apy. Challenges specific to DMD gene therapyinclude the systematic delivery of the gene to allaffected muscles, as well as significant hurdlesin manufacturing and immunological response tothe therapy. Furthermore, there is the challengethat gene therapy, if successful for DMD patients,

would only prevent further damage, but will notbe able to address muscle degeneration that hasalready occurred.

5.2 Disease modifying therapies

In addition to its Corrective Therapies platform,Solid is building a pipeline of small moleculeand biologic assets, which have the potential toaddress the secondary disorders that result fromDMD (see Figure 3). Most of the assets, whichmust show utility in DMD, are or will be in-licensed from other organizations, or developed inpartnership with other organizations. For exam-ple, in 2016 Solid established a collaboration withStrykagen to investigate Galectin-1, a preclini-cal biologic candidate that has the potential toimprove muscle regeneration and repair throughmultiple biologic pathways.

5.3 Assistive devices

Solid Biosciences’ assistive device platformfocuses on devices that may help patients per-form everyday activities with greater ease. Theplatform currently encompasses the company’s

Figure 3 Solid’s Disease Modifying Therapy approach.



activities in developing an exoskeleton suit forchildren with DMD, called the Solid Suit. Solidadded the suit to its portfolio after recogniz-ing that patients were physically limited in waysthat could be alleviated through an innovationlike the Solid Suit. Unlike the other candidatesin its portfolio, which address the biochemicalcauses of DMD, the Solid Suit addresses a pre-viously unmet need discovered through its closeinteractions with the patient community. In fact,Parent Project Muscular Dystrophy, a leadingU.S.-based patient advocacy group, founded bya mother of two sons with DMD, is one of thenoteworthy partners in the development of theSolid Suit, providing unparalleled information,connections, and access to patients and opin-ions that continue to influence the developmenteffort.

5.4 Disease understanding

Solid’s Disease Understanding platform focuseson research and development to identify newpotential biomarkers for measuring the progres-sion of DMD. At present, many existing DMDclinical trials use expensive and invasive mus-cle biopsies to measure the dystrophin proteinlevels in affected patients. Alternatively, studiesmay employ gross motor function tests. However,these assessments do not necessarily provide bio-chemical information about the impact of a DMDtherapy on the human body. Solid is looking tosupplement current tests by examining potentialDMD biomarkers in serum or urine to identifyadditional relevant clinical endpoints. While thereis a growing amount research to identify DMDbiomarkers (Hathout et al., 2016), no effectiveserum and urine biomarkers have been validatedfor DMD clinical trials. The company hopes thatits work will lead to an improved understandingof DMD’s disease progression and provide syn-ergistic opportunities for enhanced clinical trialswith their existing pipeline.

6 Analysis of business model

Solid Biosciences identifies itself as a disease-focused company that pursues multiple approacheswith the potential to benefit DMD patients. As a“one-condition” company, Solid balances its sin-gular focus with diversification in its researchand development strategy. Its focus on a sin-gle disease gives the company a competitiveadvantage, and establishes it as a center of excel-lence for DMD, allowing it to gain significantbusiness and scientific expertise in therapeuticdevelopment. Equally, Solid achieves strategicdiversification in two ways: by targeting variouspoints along the pathological cascade experi-enced by DMD patients, and by pursuing variedapproaches to the treatment of DMD. It is ableto achieve portfolio diversification by targetingdistinct yet complementary approaches, whilesimultaneously pursuing methods to better under-stand and measure the underlying biology of thedisease. In addition, a diversified approach isconsistent with Solid’s modality-agnostic strat-egy, not tying itself to any particular cure ortechnology platform.

A common model in the biopharmaceuticalindustry is to apply a compound or modality to asmany different indications as possible. Solid takesthe opposite approach, and applies as many viablemodalities as possible to one disease. Solid’s strat-egy, in essence, is to take many well-selected“shots on goal,” all of which are complemen-tary, and where one success does not take awayfrom the possibility of success in other areas.While the DMD-causing gene mutation, and itssubsequent pathology, have been well charac-terized, the reasons for the mutation are stillunknown. While some mutations are hereditary,a significant portion occurs spontaneously (Fair-clough, 2013). Because of the heterogeneity inits disease biology, DMD, like many diseases,manifests and expresses itself in different ways in



different patients. Furthermore, the mutation andthe accompanying lack of the dystrophin proteinresult in numerous associated disorders that offerseveral targets for further research and develop-ment. As a result, Solid’s assets may be usefulto address the various phenotypes and associatedchallenges of DMD patients.

Beyond the strategic approach of its portfolio,Solid’s one-disease model allows it to be efficient,nimble, and focused. Because it can convene thetop scientific experts, key patient groups, andtop talent, Solid is able to leverage this exper-tise to mitigate the many scientific and financialchallenges associated with drug development.

6.1 Keys to success

Like other biotech companies with responsibil-ities to its investors, Solid Biosciences definessuccess through its valuation, which is driven byscientific progress and reaching its milestones. Asthe parent of a son with DMD, Ilan Ganot is a

Figure 4 Complementary approaches under a one-condition focus.

strong parental advocate within the DMD com-munity. His direct ties and personal understandingof the medical and human experiences of DMDpatients enable the company to identify and tacklesignificant problems in the treatment of DMD. Atthe same time, as the CEO of a company focusedon DMD, Ganot and his team must manage poten-tial conflicts of interest. Solid has implementedmeasures to ensure its objectivity by creating agovernance system to check and review man-agement decisions. As a result of mitigating thisrisk, Ganot’s personal ties and motivation serve asassets when meeting with existing and potentialinvestors, rather than potential conflicts.

Furthermore, the company has been able toassemble an impressive board and advisorycommittee of DMD experts, who not only providecredibility for its work, but also advise its man-agement decisions. Solid has been successful inconvening experts and encouraging collaborativework between them. Having the top DMD expertson its board to advise Solid provides a signifi-cant advantage over biotech companies that mayapply a technology platform more diffusely acrossseveral diseases.

Finally, an undeniable key to Solid’s success isGanot’s single-minded determination to find atreatment for DMD, not only for his son, but alsofor all patients with DMD. Under Ganot’s lead-ership, Solid is solely and genuinely focused onimproving the lives of patients with DMD. Thissingle-minded determination is reflected in themission of the company, as well as its businessstrategy. Solid is successful because it focuseson the problem first, and then looks for the bestsolutions and approaches to solve it. To help oper-ationalize this effort, Solid’s team consists ofpeople who believe in its mission to treat DMDpatients with the best therapies as quickly aspossible, and are committed to developing a treat-ment for the DMD community. Before Solid’s



Series B fundraising, a number of pharmaceuticalgiants offered to partner with Solid and potentiallybuy it, based on the company’s promising SGT-001 gene therapy results. Solid turned down theoffers in order to maintain its control of the devel-opment of its gene therapy platform. Selling anasset and leaving its future in the hands of anothercompany does not align with Solid’s mission.Ganot had already observed that larger pharma-ceutical companies often choose not to pursuedevelopment of early-stage assets, whether due torisk, limited resources, or more attractive optionsin their vast portfolios.

6.2 Patient perspective

An instrumental key to Solid’s success is its sup-port from DMD patients, families, and advocacygroups, which together comprise an extremelyclose-knit community. This support is not merelyfinancial. For years, this community has joinedforces to advocate for more research and progressin DMD drug development; and for years, it faceda series of disappointing updates, or worse, a lackof interest in this rare disease. Today, however,the drug development landscape is quite different,with many companies seeking to develop thera-pies for rare diseases, motivated not only by anunmet medical need, but also the promise of asignificant return on investment.

For Solid Biosciences, the involvement of DMDpatients and their parents is critical. Keeping thepatient’s perspective in mind during developmentallows Solid to understand the true pain points ofpatients and the clinical effects of the current stan-dard of care. Many of Solid’s employees maintainclose ties with the patient community. The com-pany’s employees regularly attend DMD patientconferences, and Annie Ganot, Eytani’s mother,heads Solid’s patient advocacy efforts, helping thecompany establish strong relationships with theDMD community globally. Furthermore, leadersof major DMD patient organizations have backed

Solid by funding and advising its research anddevelopment activities. Examples include ParentProject Muscular Dystrophy, which invested inthe Solid Suit and has collaborated with the com-pany on other activities; DMD Research Fund;DMD Children’s Trust; Joining Jack, whichco-founded Solid GT; and a number of addi-tional partnerships with DMD groups worldwide.Solid’s one-condition focus has been instrumen-tal in developing these partnerships with DMDpatient organizations, which recognize Solid’sdedication and commitment to the same disease.

7 Challenges and future plans

Since 2013, Solid has achieved significantmilestones and built a pipeline of promisingassets with the potential to treat DMD patients.However, drug development is a risky and costlyendeavor for any company, and Solid Biosciencesis no exception. Moreover, Ganot is a first-timeCEO and a newcomer to drug development. Asit stands, Solid relies heavily on partnershipswith third-party companies, labs, and manufac-turers for its work. In addition, like many biotechcompanies, Solid will need to rely on partnersfor its manufacturing and distribution capabil-ities. Because Solid’s mission is to reach theglobal DMD patient population, partnerships areconsidered the primary means to achieve thisgoal.

One criticism of the company is: with so manyapproaches, is Solid really able to focus itsactivities to achieve success? Solid, like otherearly biotech companies, has limited resources,and it must decide how to allocate funds acrossits portfolio. If it pursues too many assets andapproaches, it risks limiting success in any givenapproach. From Solid’s perspective as a drugdeveloper and patient advocate, however, it iden-tifies the work that it finds most promising forDMD patients and attempts to bring it closer tomarket. As it grows and progresses, Solid will



have to address increasing development costsas its assets enter the clinical stage. Further-more, because of Ganot’s personal ties to thedisease, Solid will need to continue to maintain itsobjectivity in its business decisions to select andshut down assets that no longer hold sufficientpromise.

In order for Solid to bring a therapy to patients, itwill also need to overcome the challenges of clin-ical development in human studies, which requiresignificant time, personnel, creativity, and funds.So far, none of its candidates have yet enteredthe clinical stage, which will be a large milestonefor the company. These studies cost millions ofdollars, and Solid will need to raise the funds todesign, initiate, and complete them. In particular,gene therapy, Solid’s biggest undertaking, willincur significant costs and resources in clinicaltrials.

Solid is also working to nurture further thera-peutic innovation by training the next generationof leading researchers and scientists in DMD.It has established the Solid Fellows program,which trains postdoctoral researchers at univer-sities currently active in DMD research, and itis setting up partnerships with universities tolay a foundation for continued and future DMDresearch. Part of Solid’s vision is to invest inacademic research that could potentially lead tonext-generation therapeutics for DMD patients.So far, the company has invested money in morethan 15 academic research labs to continue andsupport DMD research.

8 Conclusion

The stakes for DMD drug development areextremely high. Hundreds of boys and youngmen die every year from this rare disease, yetdrug development for it has been riddled withfailure. Several companies have filed DMD can-didate drugs for approval with the FDA, but only

one has achieved this goal. News of a rejectedcandidate is a setback for the entire DMD com-munity of patients and families, including Ganotand his family. While Solid does not have acandidate in clinical trials, the team has beenvigilantly watching these developments. Theserecent FDA decisions have provided Solid Bio-sciences with important knowledge about theapproval process, and have helped the companybetter understand the agency’s position on mat-ters such as dystrophin expression, the need forsufficient endpoints, and the high threshold forFDA approval.

In this case study, we have highlighted SolidBiosciences’ business model. Solid Biosciences’one-disease focus on DMD has enabled it toachieve significant milestones relatively quicklyand efficiently, and have made it a center ofexcellence for research, attracting patient groups,researchers, advisors, and investors to join itsmission. Solid’s expertise in DMD enables it todiversify its projects and approaches strategically.Still, Solid faces several hurdles ahead as it entersthe clinical stage, where any candidate’s chancesof success are low (DiMasi, 2014).

As interest in developing therapies for rare andorphan diseases increases in the biopharma indus-try, it is fruitful to consider business models thatcould result in faster cures with lowered risk.A diversified, one-condition approach has thepotential to be a model for other biotech compa-nies to emulate in rare disease drug development.Furthermore, investors may find this model ofdevelopment to be more attractive than traditionalmodels in which a single technology platform isapplied to multiple and varied indications.

Beyond creative business models, however, drugdevelopment for rare diseases like DMD could behelped by external systemic changes that incen-tivize or accelerate development. While beyondthe scope of this discussion, policy changes are a



critical area for further inquiry to speed up inno-vation for rare diseases. The Orphan Drug Des-ignation has already been successful in attractingdrug developers to study long-neglected diseases.Additional policies that accelerate the approvalprocess, or modify the thresholds for approval,may be able to help bring drugs to the millions ofU.S. patients with rare diseases but limited or notreatment options.

For decades, the DMD patient advocacy commu-nity has been waiting and pushing for treatmentsfor DMD. Every month or year that a treatmentis delayed, thousands of children further deterio-rate. Ilan Ganot’s son, Eytani, is now six yearsold, and is increasingly showing symptoms ofDMD. However, there is hope in the patient com-munity that a cure or an effective treatment isachievable. More than ever, the scientific com-munity’s understanding of DMD and its biologyis of increasing use in drug development. Tech-nological and scientific advances have allowedcompanies like Solid Biosciences, which employstrategic business models to minimize their riskwhile maximizing their chance of success, totake innovative approaches to drug development,toward the ultimate goal of achieving the long-desired breakthrough treatments for the DMDpatient community.

Acknowledgments

We thank I. Ganot for agreeing to participatein this case study and providing access to SolidBiosciences senior management, investors, anddirectors. We thank Pat Furlong, Gilad Hayeem,Carl Morris, Andrea Ponti, Joel Schneider, andAndrey Zarur for participating in interviews forthis article. We also thankAnnie Ganot for provid-ing introductions to the DMD patient advocacycommunity, Valorie Kopp-Aharonov for helpwith arranging interviews, and Kate Niazi-Sai forhelp in the editing process. We also thank JaynaCummings for helpful comments. The views and

opinions expressed in this article are those of theauthors only, and do not necessarily represent theviews and opinions of any institution or agency,any of their affiliates or employees, or any of theindividuals acknowledged above.

Funding

Research support from the MIT Laboratory forFinancial Engineering is gratefully acknowl-edged.

Author contributions

Both authors contributed equally. A.W.L. firstconceived the idea of writing a case study ofSolid Biosciences and held several meetings withI. Ganot in preparation for the study. Inter-views were arranged and conducted by E.K.in consultation with A.W.L. Both authors con-tributed to the preparation of the manuscript.

Competing interests

E.S.K. declares that she has no competing inter-ests. A.W.L. reports personal investments inBridgeBio Capital (also an advisor), ImmuneX-cite, KEW, MPM Capital, Novalere, RoyaltyPharma, and Visionscope, and is a director of theMIT Whitehead Institute and Roivant Sciences.

References

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Keywords: Megafund; portfolio management;cost of capital; rare diseases

Bios of Interviewees

Ilan Ganot, CEO and Co-Founder of SolidBiosciences. Mr. Ganot is Founder and ChiefExecutive Officer of Solid Biosciences and Solid

GT, and a member of the board of directors ofboth companies. He started Solid in 2013 to findtreatments, and potentially a cure, for Duchennemuscular dystrophy, a disease that afflicts his sonEytani. Prior to starting Solid, Mr. Ganot was aninvestment banker at JPMorgan Chase in Lon-don, specializing in hedge fund-driven equitiesbusiness for the firm. Mr. Ganot also workedat Nomura Securities in London, Hong Kong,and New York, where he managed relationshipswith investors and clients of the firm. Prior toNomura, Mr. Ganot was a senior salesperson forLehman Brothers’ European Equities business.Mr. Ganot embarked on a banking career afterpracticing law at the Israeli law firm, Haim Zadok& Co, where his focus was private equity law andmergers and acquisitions. Prior to practicing law,Mr. Ganot was division head at Vir-Tech, a laserengraving business, and a captain in the IsraelDefense Forces. Mr. Ganot received his MBAfrom London Business School and holds lawand business degrees from the IDC in Herzliya,Israel.

Gilad Hayeem, Co-Founder of Solid Bio-sciences and Managing Partner at WaverlyCapital. Gilad Hayeem is a member of the boardof directors of Solid Biosciences and Solid GTandis an active manager. Mr. Hayeem founded SolidBiosciences through his family office, WaverlyCapital, and led the Series A round alongsideJPMorgan. Mr. Hayeem was Managing Partnerand CEO of Marble Bar Asset Management, aUK based investment fund he founded in 2002,which he exited in 2010. Mr. Hayeem then movedto New York, where he lives with his wife andfour children. Mr. Hayeem received his MBAfrom City University, London, and holds historyand politics degrees from the University of Leeds,England.

Andrey Zarur, Co-Founder and Chairman ofthe Board of Solid Biosciences. Andrey Zarur



is Founder and Chairman of the Board of Solid.Dr. Zarur has been active in early-stage life sci-ences companies for more than 20 years, and hasparticipated in the creation of more than a dozencompanies in the healthcare and clean energy sec-tors. He is also Chairman, CEO, and Founder ofGreenLight Biosciences, and a partner at KodiakVenture Partners, a venture capital firm specializ-ing in the formation of early-stage informationand life technology investments. Prior to join-ing Kodiak Venture Partners, he was founderand CEO of BioProcessors, which was sold toSeahorse Biosciences in 2007. In addition to Bio-Processors, he has led four life science companiesfrom inception to exit. Dr. Zarur is also a co-founder and chairman of the board for Lumicell,and chairman of the board for Allegro Diagnos-tics. Dr. Zarur was named a Young Global Leaderof the World Economic Forum in 2005. He is anOverseer of the Museum of Science in Boston anda Senior Lecturer at the Massachusetts Instituteof Technology (MIT) Sloan School of Manage-ment. Dr. Zarur holds Masters of Science degreesand a Ph.D. in Chemical Engineering from MITand undergraduate degrees from the National Uni-versity of Mexico. Dr. Zarur is the author ofseveral peer-reviewed articles and holds close to100 provisional and issued patents.

Carl Morris, VP of Research and Develop-ment of Solid Biosciences. Carl Morris is theVice-President of Research and Development,responsible for overseeing the drug developmentprocesses for Solid Biosciences. Prior to join-ing Solid, Dr. Morris was a Senior Directorfor Pfizer’s Rare Disease Research Unit, lead-ing their efforts in neurologic diseases and themuscle biology programs. While at Pfizer, Dr.Morris directed several small molecule, andbiotherapeutic development programs, includ-ing a program that led to a Phase 2 study inDuchenne Muscular Dystrophy, while also head-ing an internal research group responsible for

advancing programs from target identification tothe clinic for many of the rare neurologic andmuscle-related diseases. Dr. Morris identifiedkey external opportunities, and worked closelywith patient groups, academic laboratories, andother industry partners to advance drug devel-opment in the rare neuromuscular space. Hisscientific and drug development experience atPfizer also included investigations into broadermuscle wasting conditions, as well as tendonand bone repair biology. Prior to joining Pfizerin 2007, Dr. Morris was an Assistant Professorat Boston University School of Medicine, anda founding faculty member of the Muscle andAging Research Unit, established to investigatestrategies for improving muscle function duringaging or disease. He completed his Postdoctoralfellowship in the Department of Physiology atthe University of Pennsylvania, where he workedon multiple projects, ranging from molecularaspects of muscle protein interactions to thera-peutic approaches for modulating muscle size andfunction. As a trained muscle physiologist, hisacademic pursuits have ranged from biophysicalaspects of muscle contraction and enzyme kinet-ics to therapeutic interventions in a variety of invivo muscle atrophy and disease models. Dr. Mor-ris holds a B.A. in Biology from Franklin PierceCollege (Rindge, NH) and a Ph.D. in Physiologyfrom UCLA.

Joel Schneider, Director of Research andDevelopment. Joel Schneider is the Directorof Research & Development for Solid, respon-sible for the identification and development ofpromising therapies for DMD. Dr. Schneider’sR&D focus includes Solid’s gene therapy, smallmolecule, and biologics programs. Dr. Schneiderpreviously completed a postdoctoral fellowshipat Harvard University in the Department of StemCell and Regenerative Biology, characterizingand developing small molecules that enhanceskeletal muscle regeneration. He holds a Ph.D.



from Rutgers University and an undergraduatedegree from Brandeis University. During hisdoctoral work, Dr. Schneider studied the car-diomyopathy associated with Duchenne musculardystrophy and is the author of numerous peer-reviewed articles related to Duchenne musculardystrophy and stem cell biology.

Andrea Ponti, Executive Partner and Founder,GHO Capital. Andrea Ponti has 30 years ofinvestment banking experience, focusing onhealthcare since 1996. He created both JP Mor-gan’s and Goldman Sachs’ European invest-ment banking healthcare franchises, advising ontransactions for leading pharmaceutical, med-ical device and hospital companies. Over thelast five years, he was Vice Chairman of Euro-pean Investment Banking and Global co-head ofHealthcare at J.P. Morgan. Prior to that, Andreawas at Goldman Sachs, where he was Partner,Managing Director, Head of European Health-care, Consumer and Retail and also Co-GlobalHead of Healthcare. Andrea sits on the board of

Cell Medica, and received a B.A. in Economicsfrom the University of North Carolina at ChapelHill, where he is also a member of the Arts andSciences Foundation Board of Directors.

Pat Furlong, CEO of Parent Project MuscularDystrophy. Pat Furlong is the Founding Presidentand CEO of Parent Project Muscular Dystrophy(PPMD), the largest nonprofit organization in theUnited States solely focused on DMD musculardystrophy. Its mission is to improve the treat-ment, quality of life, and long-term outlook for allindividuals affected by DMD through research,advocacy, education, and compassion. Alongwith leading PPMD, Pat speaks about DMD andrelated topics at conferences each year world-wide, and is an active Board member with theGenetic Alliance and the Muscular DystrophyCoordinating Committee, U.S. Department ofHealth & Human Services. Pat graduated fromMt. St. Joseph College with a B.S. in Nursing,and also attended graduate school at Ohio StateUniversity.


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