Wolfgang Klein of AMD Therapy Uses Crowdfunding to Co-Fund New Technologies

Dr. Wolfgang Klein is the co-founder and member of AMD Therapy, a German-based company focused on developing an innovative approach to addressing the funding gap and to help emerging healthcare and life science companies. Using the internet and crowdfunding, the firm is developing an investment partnership and they’re now raising 60 million Euros that they hope to close by the end of the year. Below OneMedRadio interviews Dr. Klein on this innovative method.

Wolfgang Klein gained his biotech background at Curevac, where he was involved in founding and developing the company through several stages from scratch towards a phase II clinical development company with over 70 employees and its own pharmaceutical production. During his time as CFO, over 60 m EUR in venture capital and research grants were raised. Answering his responsibility for HR, he headed the formation of a successful team and a productive culture.

Wolfgang Klein received his PhD in biology from Albert-Ludwigs-University in Freiburg and an MBA from Krems University.

Click below to hear full audio interview and see transcript that follows.

Brett Johnson:      Welcome. This is Brett Johnson in New York City with OneMedRadio. Today, I’m with Wolfgang Klein. He is the co-founder and member of AMD Therapy, a German-based company focused on developing an innovative approach to addressing the funding gap and to help emerging healthcare and life science companies. Using the internet and crowdfunding, the firm is developing an investment partnership and they’re now raising 60 million Euros that they hope to close by the end of the year. Individuals can invest as little as 3000 Euros to be part of this. They’ll be focusing on AMD or dry macular degeneration, which is a problem that affects millions around the world and for which there’s very little new development going on. They hope that they can finance some of these developments and bring some products to the market. Thanks for joining us today, Wolfgang.

Wolfgang Klein:   Well thanks for having me.

BJ:       So, Wolfgang, this is an interesting business model. You’re essentially using crowdfunding to create an investment partnership to raise 60 million Euros to try to fund new companies. Are you aware of any other investment companies or people that have done this kind of approach that sort of use the internet as an investment aggregator for companies?

WK:  Not in the healthcare and therapy development space. This is a space where lots of funds are needed in order to create new therapies and move them through what we call a financing gap, which is the space between academic research and commercial development. You need money in order to validate candidates that come out of the university and research institutes before pharmaceutical companies or the pharmaceutical industry and venture capital industry think a new candidate is attractive. As a consequence of this, no new or very few new drug candidates make it to the market. If there’s no supply of interesting and partly developed candidates, there’s not going to be new drugs in the market.

One space that this problem is particularly problematic is dry age-related macular degeneration. There’s only a handful of developments in clinical stage and as a patient you would think we need more. This is the idea of our concept. We try to move in patients and people concerned with dry age-related macular degeneration and have them co-fund new developments in the early stage and thereby they can generate two sorts of return. One is a health return or new prospectives or new candidates in advanced stages of development and the other return is of course financial return. If things are going to be successful, there is going to be financial return for those who invested.

BJ:       So Wolfgang, that’s a very interesting approach. How did you guys come up with this idea to raise money this way?

WK:    I know from my previous work how difficult it is to raise finances for drug development or medical device development. I was the CFO of a biotech company in Germany and when I moved on and became an advisor for financing, I had many clients who were struggling to find financing for their really attractive, innovative approaches that could become new paradigm-changing medicines in the market. They were just very early and therefore not attractive for the pharmaceutical industry or venture capital industry.

In order to bridge this gap of data basically, data confirming and approving that the early research-based inventions were valuable, you need money. You need money in order to validate them, in order to prove them. So we came up with the idea to move in stakeholders that have special interests and those are patients. They are waiting for new medicines particularly in a disease such dry age-related macular degeneration where there is no approved drug in the market and there are very few developments going on, but there are still many good ideas around.

I just came back from a conference in Florida, ARVO where we had a booth and people just stepped up to our booth and asked can I have money for my idea and there were maybe 20 such parties coming to our booth. So there is interest. There is interesting candidates around there, they just need funding to get over the first hurdle and become interesting to the pharmaceutical and medtech industry.

BJ:   How much do these companies, technologies tend to need in the way of financing?

WK:  It depends. It’s more difficult certainly for drug development, which is the harder task to get approval for new drugs. In order to get proof of concept, which is what you need in order to be attractive to the pharmaceutical industry, we calculate between 10 and 20 million Euro per development project. Now, this does not necessarily need to be funded by AMD therapy. We of course are looking for co-investors from government side and also from private sector investors. So the more co-investors we find, the less amount AMD Therapy will have to bring in.

BJ:     How many developments or ideas do you think are there now looking for financing like yours in your space?

WK:    I just came back from ARVO, which is the largest research congress convention in the world for ophthalmology, and we had a booth there and about 20 to 30 parties stepped up to our booth asking for financing. So in this singular event, we collected 20 to 30 ideas, which we’d have to look into them how good they really are. But it just tells a story that there are ideas out there, they just need to be checked how valuable they really are and then they need funding in order to prove their value to the pharmaceutical industry.

BJ:   So I guess what you’re saying is there’s let’s say or there’s probably 50 out there, but there’s 30 that walked up your booth that have possibly a cure to age-related dry macular degeneration, but none of these things are getting developed and none of these things are essentially on their way to the market? Is that what you’re saying?

WK:  The risk that these early candidates will suffer setbacks on the way to approval is considerable. Even if we decide in the early stages, this is worthwhile trying, there might be results on the way to approval showing that they’re not tolerated by humans, well tolerated, or showing that they’re not effective and those results will just end development. The risk to be unsuccessful on the way to market is just very considerable. So if we have 50 ideas of which, I don’t know, 5 to 10 prove to be worthwhile trying, we might still end up with one who really makes it.

BJ:     But that one who makes it can be well worth and more than offset the cost of developing many of the others.

BJ:    How big is the market I mean for this need?

WK:   There are drugs in the market for the wet form of age-related macular degeneration. Lucentis and Eylea in the US. Lucentis for the last few years has had a billion dollar sales. Roche and Novartis combined made more than 2.5 billion dollars in sales on wet AMD. Now, wet AMD is only 15% of the people affected with AMD, the rest 85% is affected with dry age-related macular degeneration, which is the less aggressive disease, but still it tells you there is blockbuster potential of the first drug and for each more effective drug following.

BJ:    Can you talk a little bit about sort of the structure of your offering and, you know, you have a website, correct, and can you talk about sort of the operational execution issues that you have to go through to I guess put this up. Then what are the regulatory issues in terms of being able to raise capital over the internet?

WK:    Well people who are interested can visit our website which is AMD-Therapy.de and there inform themselves about what we do. There’s an English version of the website so if people do want to join, there are membership forms, which need to be printed out and signed and sent to us. Then from a regulatory perspective, there is no concern from our side. People can join from all over the world.

BJ:    Does someone have to be an accredited investor to join?

WK:  No.

BJ:  Again, the minimum is 3000 Euros. Can you put in as many – is that for a unit or can you buy as much as you want in?

WK:     You can put in as much as you want and people are welcome to do so of course.

Technically, AMD Therapy is a cooperative and cooperatives in Germany are exempt from some of the financial regulations and this makes AMD Therapy the first crowdfunding approach that can collect unlimited amounts of money from an individual investor as well as from the crowd.

BJ:   What makes it a cooperative or what is that structure?

WK: A cooperative is very similar to a stock company. Members pay membership fees in order to buy shares of a cooperative and the difference is that members of a cooperative do have one vote as opposed to shareholders of a stock company that has many votes as they have shares. So that’s the difference.

BJ:    I see. Do you expect that there will be many votes? I mean from a corporate governance point of view, what are the challenges of having thousands and thousands of voters?

WK:   We introduced mechanisms into the statutes that allow to do many things with modern communication technology. So people will not have to travel from somewhere in the US or in Australia to Germany in order to be represented in the corporate governance procedures such as annual meetings or something like that. People will just get the decisions that are about to be taken on such a meeting and they will usually be able to vote by mail or by fax copy or something like that.

BJ:  Does your website have a shareholder agreement that outlines the types of items that will be voted on and so on?

WK:   Absolutely. Currently, the German version is posted and we’re just about to post translation and then use translation to the shareholders agreements that are necessary to be known of course by members.

BJ:     So going forward, what do you see as the biggest challenges for AMD Therapy?

WK:   Right now, we need to fill the fund and get known to people with dry AMD.

BJ: How many people have dry AMD in the world?

WK:   There are about 10 million in the US and another 10 million in Europe and it is a disease that is more prevalent in developed countries than the rest of the world so it is even hard to find figures for the rest of the world.

BJ:      Do most people who have dry AMD, does it progress then into wet AMD? Is that the progression?

WK:  All people with wet AMD do have earlier forms of dry AMD. So all wet AMD have also dry AMD, but not all dry AMD progress to wet AMD. There’s also a late stage form of dry AMD, which is called geographic atrophy and of the 100% of people concerned with AMD about 15% get the wet form and another 15% get the late stage dry form with geographic atrophy.

BJ:    Well it sounds like an extraordinary idea and we’ll be very interested to follow your progress and your development. You’re hoping to – will there be a minimum close date? I know your goal is the 60 million Euros, will there be a sort of a minimum at which you can break Escrow and begin to make investments?

WK:    There will be. If we fail to raise the 60 million, we will have to look at what investments are out there, which are interesting for our investors and then decide whether the amount of money we raised is enough in order to invest into at least one investment. If we doubt that the economic basis is there then we’ll just go to our investors and ask them would you like to continue or would you like to break this up and get your money back.

BJ:  Interesting. Well that’s very exciting. We’ll be very interested to follow your progress. Thank you so much for joining us today.

WK:  Well thank you for having me.

BJ:  Terrific. So that was Wolfgang Klein. He is the co-founder of AMD Therapy, a German-based company, which is using the internet to build their investment fund in a very interesting approach. You can learn more about his company at www.AMD-Therapy.de. This is Brett Johnson in New York with OneMed Radio signing off. Good day.

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