From Grant-Makers to Co-Developers
How Rare Disease Foundations Rewrote Their Role in Therapeutic Development
Five years ago, if you asked what rare disease foundations did, the answer was fairly predictable: raise money, fund a few academic labs, run a patient conference, and hope a pharma company eventually notices your disease. Today, that description undersells what some of the most pioneering foundations actually do. Those select foundations look less like charities and more like small biotech companies — sourcing assets, structuring investments, running trial-ready registries, and in some cases founding and owning equity in the very companies developing their community's treatment.
The Playbook Everyone Points Back To
Any conversation about this shift eventually lands on the Cystic Fibrosis Foundation (CFF). CFF's decision in the 1990s and 2000s to directly fund Vertex Pharmaceuticals' CFTR modulator research — rather than simply hoping someone would work on cystic fibrosis — became the reference case for the entire field. When Vertex's therapies succeeded, CFF sold its royalty rights for $3.3 billion in 2014, a windfall it plowed back into further research. No other foundation has matched that outcome, but the model has been widely copied: instead of funding a company's whole pipeline, a foundation funds the specific program that matters to its patients, in exchange for revenue sharing, royalties, milestones, and/or equity.
What's changed in the last five years is how far down that path other foundations, including RSRT, have been willing to go — and how much earlier in a biotech's life they're now willing to get involved.
From Grants to Cap Tables: Foundations Engage Biotech Partnerships
Foundations are increasingly showing up as investors rather than grant makers. The Rett Syndrome Research Trust's (RSRT) late 2024 investment in ProQR, a publicly traded RNA-editing biotech, is a case in point: a disease-specific nonprofit taking a direct financial position in a public company's pipeline, not just handing over a grant with no expectation of return.
In line with developing multiple shots on goal, RSRT has also entered into a partnership with an Italian newco, Reverta, for the development of a gene supplementation approach for Rett syndrome. Using a combination of both in-kind and capital investments, coupled with an experienced internal team and data from its biomarker and outcome measure studies, RSRT is helping Reverta build a strong translational program destined for the clinic in 2028.
This is "venture philanthropy" in the strict sense — applying venture capital discipline to money that originated as charitable donations. It's attractive to foundations for an obvious reason: traditional grants are sunk costs, while program-related investments can be recycled into the next program if a therapy succeeds. Legal and philanthropic advisors have noted this approach has taken on new urgency as federal funding for life sciences research has become less predictable, pushing foundations to see themselves as a genuine, durable layer of R&D financing rather than a stopgap.
RSRT has also taken this path in the emerging space of RNA trans-splicing. Its attraction as an approach applicable to all patient mutations is compelling despite its early discovery stage. In order to drive and test this approach RSRT has entered into a milestone-tranched equity position with Tacit Therapeutics. Tacit is an early-stage Bay Area biotech with promising early data showing that AAV delivery of wild-type exons can swap out mutated sequences.
RSRT has also acquired a license to a next generation viral delivery capsid (CapX from Apertura). This points to the value of aggregating tools with reciprocal exchange of technology to build a viable translational program.
Some foundations have gone a step further and created venture funds. One example is the Dementia Discovery Fund, which pools capital from foundations, industry, and government to back translational science none of them could fully de-risk alone. That structure lets a foundation get venture-style diversification and professional deal sourcing without having to build an internal investment team from scratch.
Why This Is Happening Now
A few forces are converging to push foundations further into biotech territory:
The biology has finally caught up. Modalities like AAV gene therapy, antisense oligonucleotides, and base and RNA editing mean that a well-characterized single-gene disease can now go from target identification to a plausible clinical hypothesis faster than ever before.
Commercial incentives still don't work at small scale. With roughly 350 million people affected by rare diseases globally and the large majority still lacking any approved treatment, traditional pharma economics continue to underserve small patient populations. Foundations that integrate patient trust, natural history data, and disease expertise are often the only parties with the incentive and the information to close that gap.
Federal funding uncertainty raised the stakes. As government support for early-stage life sciences research has become harder to count on, foundations have increasingly stepped up to fill financing gaps that used to be assumed to be government's job.
What This Means Going Forward
The practical upshot is that a rare disease foundation today is judged on a different set of skills than it was five years ago. Scientific advisory boards still matter, but so do corporate development experience, term sheet literacy, and the ability to gather data to FDA-grade rigor. Foundations that can do both — fund the science and structure the deal — are increasingly the ones determining which diseases get a shot at treatment at all.
It also changes the conversation biotechs need to have with patient groups. A foundation showing up to a partnership discussion is no longer just a source of goodwill and patient recruitment; it may be a co-investor, a data provider, a former company founder, or all three. For biotech leaders navigating rare disease programs, that foundation across the table might functionally be one of your most sophisticated stakeholders in the room.
