Decentralised Science — a cure for the Science sector’s woes?

Our thoughts on Decentralised Science, or DeSci, an exciting new market that is being created: an open way to align researchers, investors, patients and other stakeholders to fund, collaborate and see the benefits of research.

Science is hard: the process of getting a new drug, from first testing to final FDA approval and ultimately to market is long (from discovery to approval of a new drug takes more than 13 years), +$2bn in avg development cost, and almost 95% of the drugs entering human trials fail.

There are many challenges with the current system of academic research:

— Grant funding is the biggest funder at the very early stages of academic research, and disproportionately benefits well established researchers: 66+ year tenured professors pursuing incremental ideas, as pointed out in New Science.

— Much has also been written about the challenges of this funding model as universities own a large part of the IP and academics are rarely empowered to participate in R&D value creation.

— The pressure of publishing invites an over-extrapolation of the significance of results, leading to a replication crisis.

— The systemic challenges within STEM have also led to a lack of diversity among minority scientists and funders, in particular women and black scientists.

Funding is what perpetuates this cycle, and if you change how capital is deployed, then you can create new opportunities and new incentives, enforce standards and principles.

— Grant funding is the main source of academic and academic lab funding, with behemoths like the NIH allocating $40bn per year to biomedical research, and UKRI £9bn per year, EU’s ERC €2.4bn.

— VC funding is an option for a small number of companies and a small pool of investors. In Europe, 996 companies raised $9.9B 2021 and $4.2B 2022YTD (link) from 1252 investors (Dealroom).

— And we think there are approximately 100 large funders of academic research in pharma and biotechs (top 25 large cap pharma companies + top 75 companies in $XBI representing the largest US biotechs).

DeSci Decentralised Autonomous Organisations (DAOs) propose new ways of funding and executing R&D where research projects can be collectively owned and funded using Web3 and blockchain technology.

— If DAOs can impact how research gets funded and executed, this will be an incredible step towards democratised access and participation in research.

— Pioneers in this movement are Molecule ($12.7m seed led by Nothpond here) and VibeBio ($12m seed led by Initialized here).

— I have personal insights from working with Ethan Perlstein and Perlara, a decentralised bio-tech to co-author a Cure Roadmap for my daughter’s rare disease, SDS.

— In fact, the DAO model could help address the key challenges facing current scientific processes including: Funding, IP, R&D, Publishing and data-sharing

So, what do we need to believe is true for DeSci to work? It is key that institutions (including grant giving organisations, VCs, pharma), individual investors and researchers believe that a DAO is capable of:

— Attracting and allocating capital to the most able researchers for the specific task

— Identifying, agreeing and operationalising governance and decision-making to approve and progress investment/research decisions

— Abiding by legal frameworks for research in different jurisdictions, and how decentralised research gets translated and deployed into different markets with different restrictions and governing bodies

— Handling legal questions around IP

Another area we’re interested in is how technology can be used in the case for decentralised health data: i.e. NFT-IP for health records

— GDPR holds back research, and most patients would love for smart academics and data scientists to be making sense of their data.

— The collection of data and analysis of existing and future medical data is especially ripe for machine learning, artificial intelligence, robotic processing automation, and cryptography startups. It also presents opportunities for NFT startups, who could look to apply the technology to create, validate and protect medical records.

We’d like to invest in this space. We’re very excited about DeSci and the startups building the future of this industry as we believe it has great potential to advance research and ultimately save lives.

SAVE THE DATE: Join us at DeSci.London @ The Crick 15–16 January, 2023. Website coming soon!

Decentralised Science — a cure for the Science sector’s woes?

A lot has been made of the benefits of decentralised finance (DeFi), fuelled by the technological advances seen across cryptocurrency, blockchain, and NFTs.

In our move towards Web3, there’s another sector which also has vast potential — the science sector.

Just as removing the power that current, centralised systems have over financial processes, in the DeFi movement, can make them faster, cheaper and more accessible, the same is posited for DeSci (decentralised science).

Why Web3 is necessary is that the technology enables use-cases that have not been previously possible with centralised technology. By putting the processes behind scientific advancement into the hands of a decentralised community, it could potentially significantly improve its impact. Medicines could be developed faster and cheaper; cures and treatments could be found for rare diseases, and patients can be involved and have a say much earlier in drug development processes.

We think the crypto downturn is actually going to lead to a flight to more real-life use cases of web3, and will significantly benefit DeSci.

Unlike the financial services sector, science has lagged the digital transformation seen in DeFi. The industry is more convoluted, sprawling and touches so many more areas. There are additional regulatory hurdles to navigate (which are of course needed as these are life and death situations!), plus extra layers of bureaucracy from the vast number of institutions involved.

This paper focuses on DAOs and IP NFTs for health records as 2 impactful areas, as well as some thoughts around where we at LocalGlobe would like to invest.

A broken system

The idea of decentralising scientific processes isn’t new. It has been championed for decades as part of the wider Open Access movement, which began as a response to the fact current models are slow, expensive, inefficient and oftentimes ineffective.

Most clinical drugs fail during development phase: To reiterate how hard science is: the process of getting a new drug, from first testing to final FDA approval and ultimately to market is long (from discovery to approval of a new drug takes more than 13 years), +$2bn in avg development cost, and almost 95% of the drugs entering human trials fail.

Funding in academia is slow and arduous

From an academic research perspective, the current model, as described by Hossam Zaki, is as follows:

1. A researcher applies for a grant. ​​From establishing collaboration to writing the proposal, this research-disruptive process is extremely time-consuming.

2. They wait, several months to a year, until they get invited for more time-intensive rounds of selection and ultimately get accepted. If funding fails, they return to Step 1

3. If funding is granted, the researcher scrambles to carry out the research before anyone else can beat them to it

4. They submit their paper detailing their findings in the hope they’ll get published. If they don’t, they return to Step 3

5. Rinse and repeat

There are many challenges in this system:

Gatekeepers (journals, institutions, grant awarders) hold a disproportionate amount of power.

In the UK, there is a £40bn government R&D budget over 2022–2025, including £25bn to UK Research & Innovation (UKRI). In the US, NIH invests $40bn into biomedical research each year, and earlier this year, Congress seeded the Advanced Research Projects Agency for Health (ARPA-H) with $1 billion for moonshot ideas. Grant funding is the biggest funder at the very early stages of academic research, and this concentration of power disproportionately disproportionately benefits well established researchers. Much has also been written about the challenges of this funding model as academics are largely disempowered to participate in R&D value creation. Changes in politics can also greatly impact funding. For example, the ERC (European Research Council) withdrew grants awarded to UK-based scientists for a suspected lack of legal framework between the UK and EU following Brexit.

Competition in the wrong places.

This lack of funding creates a system of scarcity, which leads to intense competition. Researchers working on the same topic or disease area end up practising in silos, instead of collaborating towards a common goal. All driven by the fear that someone else publishes first.

Publishing output does not equal impact.

This fear comes from the fact that bibliometrics, including the number of papers and citations a researcher has and the journals in which they are published, is currently the currency which determines success. A person’s perceived success then, in turn, influences their chances of getting funding. All current incentives centre on publishing as much as possible, rather than discovering and sharing truly useful insights.

Quality of research and little sense of urgency.

It can be argued that institutions that receive grant funding are incentivised to sandbag their deliverables, and resourcing is arguably deployed in a way designed to preserve ‘runway’, rather than maximise impact. To ensure the next round of funding, scientists are pushed to pursue discovery in an incremental manner rather than tackling radical ideas that may present more risks therefore a higher chance of failure. The pressure of publishing (publish or perish) invites an over-extrapolation of the significance of results, leading to a replication crisis where the results of many scientific studies are difficult or impossible to reproduce.

Negative impact on diversity of talent.

Current research models create barriers, not only to scientific innovation and advancement, but to researchers and academics who don’t fit this current mould. It’s difficult enough for scientists, generally, to enter the profession, make a living and establish themselves. Let alone for minority groups, such as female and black scientists. As was seen in a recent UK study which found that, of all the 20,000 PhD places offered to students across 51 UK universities in the last 3 years, only 245 (1.2%) went to Black students.

Women also tend to be under-represented at doctoral level, even in fields where they are over-represented at master’s level. While 54% of graduates in natural science, mathematics and statistics at master’s level were women, they made up only 46% of doctoral graduates in this field, on average, according to the OECD.

Interesting to see that already in 2019, Experiment saw that students and junior investigators are more likely than senior scientists to secure crowdfunding for their research, and that women secured more crowdfunding than their male counterparts, here.

There have been projects launched in an attempt to remove these barriers. In the UK, for instance, biorXiv (bioarchive) — a free online archive and distribution service for unpublished preprints in the life sciences — has changed the way in which scientists interact with publishing houses. With biorXiv, academics can get results earlier, publish a pre-print and no longer have to wait for it to be peer-reviewed. This solves part of the access problem, yet raises questions about quality. In particular, scientists are afraid that biorXiv is not recognised by grant-giving institutions.

There are lots of ways in which we might tackle these problems. But if we were to be reductive and try to tie it down to one thing that we could tackle, it would be how science and research are funded.

Decentralised Autonomous Organisations (DAOs)

The concept of decentralised science is not new, but the movement is now being supercharged by web3 due to unique governance and token structures that incentivize collaboration within DAOs. And lots of excitement and energy is pouring into this space with recent funding announcements from Molecule ($12.7m seed led by Nothpond here) and VibeBio ($12m seed led by Initialized here).

DAOs are community-led entities that don’t have a central authority. Instead, they act autonomously and transparently. Every DAO is governed by its individual members, who collectively make decisions about the future of the project and these decisions are recorded and managed via smart contracts.

Smart contracts are programs that run on blockchain. They lay down a series of foundational rules and are used to automate the execution of an agreement. In the case of DAOs, community members create proposals and come together to vote on each proposal. Proposals that achieve a predefined level of consensus are accepted and enforced by the rules within the smart contract.

Part of the power of the DAO smart contracts framework is that all community members are intrinsically aligned. It’s in each individual’s best interest to only approve proposals that generate greater usage, which in turn increases the value of the tokens each of them hold. The more a protocol succeeds in its wider mission, so do the token holders, the researchers, the patients and other stakeholders.

In this way, the DAO model can help address the key challenges facing current scientific process models, namely:

1. Funding

2. IP

3. R&D

4. Publishing and data-sharing

Let’s consider each of these in turn.

DAOs and Research Funding

DAOs including @vita_dao, @PsyDAO_,(initially started by Molecule) are aiming to improve access to funding, while making funding decisions more transparent. These DAOs are dedicated to tackling high-risk high reward ideas, overlooked by traditional funding bodies, e.g. VitaDAO is focused on research into ageing and longevity. PsyDao was set up to advance research into psychedelics.

These DAOs are organised on Discord and allow anyone to join. They offer best-in-class Community Management to onboard individuals and to get them productive, while running weekly Ask Me Anything events, working groups and more. Within this model, scientists around the world can submit funding proposals to the DAOs.

They then issue tokens so people can become members of the DAO, this fundraises for the research and provides governance rights to those who own the tokens. The members of the DAO can then use their voting rights to decide on what research they would like to fund in hopes of moving closer to a potential therapy. More here.

To date, vitaDAO is the leading DeSci community:

14+ Projects funded with $2.5m+

20+ projects under review

70+ projects evaluated

700+ members

$2.6m in treasury (liquid)

$5m in assets

Interestingly, in late August, Pfizer invested $500k into VitaDAO, a good signal that they are paying attention to this movement and looking to learn.

For some projects, time from initial proposal submission to funding was 3 weeks, far faster than alternative funding mechanisms. Examples of successfully funded projects:

And just last week, Molecule announced the launch of a Biotech DAO launchpad programme: @bio_xyz to “fund & support future builders in decentralized science & biotech through shared governance rights” with the first cohort including @valley_dao (synthetic biology), @athena_DAO_ (women’s health), @psy_dao (psychedelics) & @HairDAO_ (Hairloss).

DAOs and IP

The IP that is generated by scientists funded by a DAO is owned by the DAO and if the collective group would like to sell off their assets they can do so under an IP-NFT. This provides a stream of revenue as the IP is sold under a smart contract to other interested parties.

Intellectual Property is notoriously complex to navigate when it comes to scientific and technological development. As the Royal Society explains, “Intellectual property rights can stimulate innovation by protecting creative work and investment, and by encouraging the ordered exploitation of scientific discoveries for the good of society, [yet]…they can cause a tension between private profit and public good.”

NFTs are tokens that are used to determine ownership of digital items and are assigned unique value based on the wider market. Once on blockchain, no-one can replicate a NFT, claim ownership or modify its details.

In August last year, the full legal IP rights and data access control to biotech research and data from The Scheibye-Knudsen Lab and the University of Copenhagen was transferred and funded on-chain as an NFT.

This data included 1.5 billion prescriptions from 4.8 million individuals over 40 years analysed by the Scheibye-Knudsen Lab from records stored in The Danish National Health Service Prescription Database. From this research, the team had correlated the survival of individuals prescribed certain drugs and are now focused on testing and developing molecules from these drugs as possible interventions in ageing.

The IP-NFT was bought for $325,000, on-chain, through voting, which was used to directly fund the research and development behind the project. In this way, it forms an exclusive licence agreement for the IP resulting from these experiments and it allows for the value of the IP to be distributed and partly owned by funders of the research.

DAOs & R&D

When lab services are siloed, they can hinder innovation and progress while also creating problems surrounding standardisation. Health data and research data from lab work are hard to come by and the data is often not structured. Biotechs typically have to deal with Contract Research Organisations and the data often comes back as PDFs or similar.

Platforms such as Opvia, are allowing such data to be standardised, enabling decentralised teams to collaborate quickly and securely. While DAOs, such as @lab_dao are aiming to rectify the access issue this by incentivising labs to perform their services for external research projects. In this way, LabDAO is positioning itself as the “AWS of biotech” and is designed to create a network of open source labs starting with bioinformatics, here is the white paper.

Elsewhere, a decentralised biotech that has personal resonance for me is Perlara. Perlara is a distributed group of scientists founded in 2014 as the first Public Benefit Corporation. It recently pivoted towards partnering with rare disease communities to develop so-called Cure Roadmaps. In my work as Trustee for SDSUK, I worked with Perlara’s founder, Ethan Perlstein to develop a Cure Roadmap for a condition my daughter has, called Shwachman-Diamond syndrome, or SDS.

Through this, and such work with other families and rare disease researchers, Perlara 2.0’s mission is to build a “fully decentralised biotech that partners with entrepreneurial families globally to create medicines spanning all therapeutic modalities regardless of the number of patients.” What I found groundbreaking was that Ethan, a generalist, could write a modality-agnostic “cure roadmap” towards multiple therapeutics, which was accepted and built upon by leading SDS academics (Prof Alan Warren, Cambridge) and leading VCs who had already invested in SDS (David Grainger, Medicxi and Yael Weiss, Ultragenyx). Perlara is not yet using tokens for decision-making or allocating capital, which makes sense when dealing with rare disease communities which tend to be fragmented and siloed.

The first step is really to get the patient communities and academics to the same table where a joined up strategy can be agreed. After that, I think a tokenomic structure could play a pivotal role in progressing research.

The sponsor of clinical trials is also an interesting avenue of development for DAOs. A new paradigm in the set-up of trials may tackle the lack of transparency and reported results and help coordinate studies across the globe.

DAOs and Publishing

The processes surrounding scientific publication have historically been the focus for the majority of blockchain-enabled startups in this space. Recent projects that take this a step further include ResearchHub.

Research Hub incentivises researchers to upload their research (preprint or postprint) in PDF form, for it to be discussed by scientists globally, with no paywall. Users are rewarded for uploading and engaging with the platform through the distribution of proprietary tokens, called ResearchCoin (RSC). ResearchCoin is also linked to reputation on the platform.

In this way, “ResearchHub encourages academics and non-academics alike to interact in a public and collaborative manner” as part of its mission to accelerate the pace of scientific research.

The DAO dilemma

While DAOs represent a move towards a global, decentralised scientific community, they are not without their critics, or concerns.

DAO’s philosophy is that anybody interested may be able to contribute in some ways, getting past credentials from the traditional world such as academic affiliation or geographical location. Adequate governance of DAOs then requires each contributor to be on board with the goals and objectives of the organisation. The process of vetting researchers as well as establishing who can vote and the power these votes wield lay at the heart of the movement.

DAOs and the move towards DeSci also run the risk of creating new barriers to entry due to the complex nature of using Discord, buying tokens, the process of creating and valuing NFTs, and so on. As it stands, only early adopters of these technologies are likely to understand or want to be involved. In the short-term, at least, this could widen the gap and further marginalise minority groups for getting involved. VitaDAO and LabDAO are doing this onboarding very well with community education designed for PIs/scientists.

Similarly, DAOs are only as valuable as the engagement from the wider community. How can such initiatives encourage published researchers who have spent their lives building up published track records to work in this new way? How to promote the value of web3 to the scientific community? We see that tools are being developed to improve UX/UI and believe the infrastructure needs to be there before we see mass uptake.

Sam Rodriques, who runs the Biotechnology Lab at the Crick says “IP available in a liquid form would introduce a lot of complications — for example, what if one of my academic competitors purchases my IP and then tries to stop me from practising it? Or what if a large, monopolistic company buys the IP, and then prevents me from building a startup to compete with them?”

Additionally, researchers embedded in institutions may not fully own the IP of their research, necessitating the creation of research agreements with university and translation teams. New regulatory frameworks are needed to address these challenges.

However, DAOs’ funding aims to be more accessible to scientists by simplifying the research proposal write-up and guaranteeing rapid feedback from the community.

Investing in DeSci

We’re on a mission to back ambitious, thoughtful and diverse Founders to transform healthcare from scarcity of clinicians and appointments to ease of access through technology and to enable new and better treatments to reach patients. To this end, we have backed some of the most pioneering and innovative healthtech companies of the past decade including AccuRx, Oxford Nanopore, Vaccitech, Hertility and Vira to name a few.

We see the DeSci movement having the potential to make science more open, more collaborative, more accessible, with the ability to advance our understanding of health and bring therapies to patients faster. There is a new market and a new paradigm that is being created, which is very hard, as the history of Web3 is proving so far.

So, what do we need to believe is true for DeSci to work? Fundamentally, institutions and individual contributors need to be capable of:

— Attracting and allocating capital to the most able researchers

— Identifying, agreeing and operationalising governance and decision-making to approve and progress investment/research decisions

— Handling legal questions around IP

We are some way away from traditional grant funders financing DeSci and DAOs, but it will be game changing to see if/when the likes of Wellcome or the NIH come on board.

Fundamentally we believe that science and R&D is already moving towards being conducted remotely, and we’re interested in those Founders building the communities and tools that enable this shift.

NFT-IP for health records

Another area we’re interested in is how technology can be used in the case for decentralised health data.

Today, UK medical records are stored within Trusts (hospitals) and GPs (primary care). If an individual requests their personal medical records, there are inconsistent standards or best practices in place to make sure the data shared is useful or even easily readable, in some cases (expect a pdf with pages and pages of notes and test results).

Researchers hoping to access groups of patient data to develop cures or treatments face a near-on impossible task, and it takes years to achieve ethics approval to set up a disease-specific registry in a single hospital (with a lead academic as the principal investigator). GDPR is holding back research, and most patients would love for smart academics and data scientists to be making sense of it.

We think the collection of data and analysis of existing and future medical data is especially ripe for machine learning, artificial intelligence, robotic processing automation, and cryptography startups. It also presents opportunities for NFT startups, who could look to apply the technology to create, validate and protect medical records.

Ultimately, though, our fascination surrounding DeSci and the startups building the future of this industry comes from its potential to advance research to save lives.

Having personally experienced the frustrations that come from slow, ineffective scientific progress, in regards to my own daughter’s rare genetic condition, I’m motivated to back the DeSci founders and technologies that will give children and families the best possible chances to live full, healthy lives.

What’s next?

— Join in: DeSci.London at The Crick: January 15–16. Website coming soon!

— Share your thoughts: We’d love to hear from you! Please add your comments and thoughts to this paper

— Founders/companies to track: Are you working on anything in this space or are there Founders and companies we should know about? Please get in touch julia@localglobe.vc

Decentralised Science Landscape