The Ultimate Guide To Biomedical Innovation in Próspera
The previous article outlined a general guide to entrepreneurs in Próspera ZEDE. The goal of this guide is to offer a new, practical protocol for developing biotech and regulated healthtech startups in Próspera - from initial concept through to IPO. The upshot is that in Prospera ZEDE, safety trials are considered enough to make early sales, so you can reduce time-to-market as a biotech.
Written by Niklas Anzinger, Alexander Tucker, Christian Larsen, Christian Betancourt, and Joshua Mann
Through harnessing the power of science, technology, and engineering, humans can now make things happen that previously could only be imagined as magic, rooted in our deep understanding of biology and our prowess in manipulating it. Infectious disease was a de facto law of nature until vaccines and antibiotics nearly eradicated them - doubling life expectancy in the past 150 years.
However, despite this incredible progress: in many significant ways, we may still live in the dark ages of medical regulation. And it prevents us from saving lives through better science and technology.
1. The Invisible Graveyard of FDA Regulation
The cost of overregulation can be quantified in terms of time, money and human lives. It costs $500m to $2bn (1), and roughly 12-15 years for a new experimental treatment to reach patients. Only 1 in 1,000 drugs that enter preclinical trials make it to human testing; and then only 1 in 5 are approved (1).
Can the cost-benefit of our current institutions and policies be justified? By one estimate, FDA regulation may prevent 5,000-10,000 deaths per decade due to keeping bad drugs off the market. However, delays have a cost as well, by withholding life-saving drugs from patients. An older 1985 estimate puts the number of lives not saved at 21,000 to 120,000 lives per decade (1,2). These kinds of estimates have high variance. It could be millions. This is not to mention things that make 100 million people a little better. As Milton Friedman liked to say, “Aspirin wouldn’t be approved today by the FDA.”
Eroom’s Law: exponential decline in pharmaceutical R&D efficiency during the same period as Eroom’s law (Moore’s law running in reverse, despite computers and our knowledge of the human genome (1).
1.1 Medical Autonomy, Self-Experimentation, and Morphological Freedom
Medical authorities have a long history of “paternalism”, regulating what goes into human bodies. This clashes with the widely shared ethical principle of informed consent (1, 2, 3). Public health legislation is enforcing the prohibition of the production, ownership, purchase, and selling of any medical compound without prior authorization, under threat of confiscation, fine or imprisonment for non-compliance.
It may not be wise to self-medicate or self-experiment, especially without medical experience. However, just because it’s not wise doesn’t mean it’s permissible for someone else to stop you from doing it. Is there a law against sitting on the couch all day eating potato chips and playing video games?
There is a strange asymmetry: if a doctor recommends insulin you may opt for exercise instead; but if the doctor recommends you exercise you may not opt for insulin without a prescription.
This has been called “risky refusal” vs. “risky access” by ethics scholar Jessica Flanigan. Flanigan further argues in her book “Pharmaceutical Freedom” that patients have a “right to try“, for anyone (under most circumstances) to be able to access drugs that a willing producer wants to make and sell to you.
A vivid illustration of the harms of medical paternalism is the movie The Dallas Buyers Club, in which Matthew McConaughey plays a man with HIV/AIDS who smuggles drugs that were unapproved by the FDA, but approved in other developed countries, into Texas to treat his and other patients’ symptoms.
1.2 Why is the FDA so Risk Averse? Intro to Type I and Type II Errors
“In all of the FDA’s history, I am unable to find a single instance where a congressional committee investigated the failure of [the] FDA to approve a new drug. But, the times when hearings have been held to criticize our approval of new drugs have been so frequent that we aren’t able to count them. The message to staff could not be clearer.”
- Former FDA Commissioner Alexander Schmidt [source]
The FDA’s conservatism is the result of bad incentives. Public officials are keen to avoid Type 1 errors, those that do visible harm, rather than to avoid Type 2 errors: those Type 2 are invisible. Patients who have been denied access to a drug don’t know what they’re missing out on (think Frederic Bastiat’s famous phrase of “the seen and the unseen” consequences of political action).
Despite this conceptual layer of abstraction, the suffering of patients from the consequences of chronic or debilitating diseases is very much real, tangible, and concrete. To these human beings the cost of trying a safe but ineffective drug might be less than the cost of doing nothing and suffering (1).
Despite this fact, in 1962, the FDA raised the bar from a proof-of-safety standard to an additional proof-of-efficacy standard, which requires evidence demonstrating product efficacy for claimed uses.
Curiously, the efficacy standard bears little resemblance to the events that led to legislation: the thalidomide or sulfadimidine public health incidents were about safety, not efficacy.
This points to a deeper problem with the way legislation is done: they are mandatory, one-size-fit all, and most importantly: there is no corrective mechanism. The FDA continues to erect ever more stringent requirements that result in greater costs for producers and patients. The direction has changed only slightly and for short periods of time. Long-term it’s been constantly on the way up.
How can we ever innovate?
2. Vitalia & A New Playbook for Regulatory Hacking in Biotech
Operation Warpspeed, the covid-19 fast-track programme, proved it could be done: expediting the evaluation of a pharmaceutical compounds safety and efficacy profile, trim in an effort to much of the bloated due process. But why is there no Operation Warpspeed for cancer*? For Alzheimers? For cardiovascular diseases? For aging itself? These patients suffer as much or more.
*Technically there is a Cancer Moonshot Program, but it has been disappointing due to its lack of practicality and problems of centralized funding (diverting resources away from other areas).
Imagine if all drug discovery was conducted at the same pace of "Operation Warp Speed”. Such a model can be made possible within Prospera, requiring only a short flight to Central America.
Enter Vitalia, a new district in Próspera ZEDE, dedicated to longevity biotech.
What is Vitalia?
Simply put, Vitalia is a safe harbor for biotech innovation dedicated to “make death optional” through biotechnology and incentive design. It’s a regulatory sandbox. A community around it.
Vitalia has hosted conferences that combine the longevity biotech movement with new ideas about law and governance. The events attracted luminaries to visit in-person, like Aubrey de Grey, Balaji Srinivasan, Naval Ravikant, Tyler Cowen, and Bryan Johnson.
If you’re familiar with crypto, here’s an analogy: existing jurisdictions are layer 1s (L1), the legal-and-governance framework applied in physical space.
Vitalia builds a L2 on top of Prospera ZEDE’s L1.
At the core, Vitalia’s L2 is a new protocol for biotech startups. This protocol aims to streamline the approval, clinical trial, biopharmaceutical and clinical development processes. It aims to develop more full-stack biotech companies that do more manufacturing, commercialization and distribution.
The protocol is built around: (1) informed consent ethics and (2) market-based regulation for expedited and more economical trials. The code behind the protocol is law (and some actual code) (3) a technology-enabled regulatory platform providing oversight, enabling safely accelerated approvals.
The protocol's goal is not to be used only in one jurisdiction; it aims to be so robust and convincing that it can be used anywhere in the world if people decide to.
2.1 Leveraging Próspera’s Legal Stack
2.1.1 Legal Engineering in Próspera
Próspera’s legal system is a fork of the U.S. Common Law codebase (also used in Hong Kong, Singapore, Dubai etc.) with a crucial legal innovation: regulatory choice in commercial law.
Regulatory choice promotes legal competition within a single jurisdiction by allowing firms to select “best practices” of any top 30 OECD countries to operate under - or even propose new regulations specific to your industry. As such, your lab could operate under Israeli or Swiss law and its neighbor CRO in the same building could operate under American or Japanese law.
Just as a pluralistic ecosystem of programming languages can co-exist and interoperate by voluntary adoption within a codebase, so can different legal norms in one jurisdiction.
However, there is one essential requirement: you have to get liability insurance called “regulatory insurance” based on your specific business risks. Full permissionlessness may be an ethical ideal. However, in the world as is it will not scale. When foreign agents or substances are introduced to the body, most people require a high level of credibility. You can only get this credibility from existing institutions staffed with experienced practitioners.
The Prospera-based Global Alliance for Regenerative Medicine, also known as The GARM Clinic, for example, has such experienced practitioners and follows standard World Health Organization (WHO) safety protocols. It’s often not the safety standards that are the problem, it is the administration of them by a centralized, monopolistic bureaucracy that induces most of the unnecessary costs.
The idea is to task insurance companies with risk assessment. This means insurers play a bigger role in selecting regulation, i.e “if you adopt regulation Y we will insure you for X.” Companies are incentivized to choose the best regulations and insurers are incentivized to give you a set of regulations and premiums that are actually reducing risk (because otherwise they'd have to pay), but it's also not overregulating you needlessly - overregulation is expensive for insurance companies (more audits = more cost).
It is a misconception that Próspera is “unregulated.” Próspera is a common law jurisdiction with a more sophisticated legal classification framework for identifying false positives and false negatives, discussed above, by relying on market mechanisms to calibrate risk and reward.
Common law is a legal system where decisions made by judges in previous cases serve as precedents for future rulings. It relies on the principle of stare decisis, which means "to stand by things decided." Common law originated in England and has been influential in many legal systems worldwide, particularly those with historical ties to the British Empire. It is characterized by its flexibility and adaptability, allowing for the evolution of legal principles over time through judicial interpretation and application.
It is a novel approach to regulation, based on many widely used and accepted legal norms.
Example 1: Próspera’s Health Services Regulation A
(written by Christian Betancourt from Ixian)
Proposed by the GARM Clinic, the Health Services Regulation A presents a comprehensive regulatory option tailored under principles of proportionality, modularity, and flexibility, acting as a malleable framework for innovative treatments and under which different regulations can be applied to different types of procedures, in accordance with international guidelines and standard operating procedures.
Based on the GARM Clinic’s experience, it regulates: (1) Conventional Medical Services; (2) Regenerative Medicine and Cell Therapies; (3) Alternative Cancer Treatments; (4) Gene and Plasmid Therapies; (5) Wound Healing; (6) Treatment protocols for PTSD and TBI (7) Operation of Laboratories; (8) Tissue Processing and Manufacturing; (9) Pharmaceutical Compounding; (10) Pharmacy Operations; (11) Medical Research with Institutional Review Board Oversight; (12) Health Training and Education; and (13) Related Retail and/or Distribution Services.
For most of these types of treatments, the Regulation calls for the Regulated Person to select either existing regulations from the United States, the Republic of Honduras, World Health Organization (WHO) guidelines, or specific protocols as approved by a recognized Institutional Review Board (IRB).
The Regulation also includes provisions for the operations of an established IRB, seeking to encourage the discovery and development of useful medical, surgical, and healthcare-related developments, recognizing the need for ethical research proposed by responsible sponsors and/or investigators to bring established safe and effective products to consumers in a reasonable time frame.
Example 2: Próspera’s Medical Innovation and Safety Regulation
(written by Christian Betancourt from Ixian)
Developed by the Minicircle Gene Therapy Clinic, its principles target to encourage the development of safe and effective medical goods and services, strengthening patient choice, and liberating medical innovators to elevate human potential consistent with medical ethics.
This framework places particular importance to the role of insurance providers in the process of compliance from medical providers, requiring that Regulated Persons establish guarantees to safeguard liabilities with patients.
It recognizes the contractual nature of the relationship between patients and healthcare providers, seeking to establish protections against negligence and risks while potentiating informed consent practices and the “Right to Try” medical innovation. It requires that patients sign detailed Waivers of Responsibility after being thoroughly informed of all material risks, while Medical Practitioners need to ascertain the Patient’s understanding of the procedures to take place.
Consider the possibility of relinquishing uniform regulations that become rigid once implemented. Instead, implementing an approach of evolutionary adaptation aligned with the scientific method. While randomized controlled trials (RCTs) are widely regarded as the "gold standard" in research, they may not always be the most efficient method.
Instead, pluralistic and open science could use a wide range of evidence and methods, utilizing prior knowledge about the drug, disease, and patient populations, and other real-world data.
3. Birds-eye View of the Current Ecosystem in Próspera
3.1 Legal & Compliance: Ixian is the go-to firm for decentralized, Web3, AI, biotech, special economic zones (SEZ), and other innovative projects.
3.2 Insurance: Próspera Insurance Company
3.3 Medical Tourism Concierge: The C7 Enhancement Center
3.4 Healthtech: There's a growing ecosystem of Honduran healthtech companies in Próspera, including Dokto, Salutec, and Doctor7.
Pristine Regenerative Nexus (PRN): an ecosystem composed of a therapeutic development and deployment framework that includes a regulatory body that provides oversight of the contract research organization’s (CRO) clinical studies and trials, ; Contract Development and Manufacturing Organization (CDMO). Working on building out the infrastructure for trials and also for contract manufacturing. With CDMO manufacturing capabilities, PRN aims to service prospective companies who achieve an approval status as their manufacturing partner here in Roatan.
Global Alliance for Regenerative Medicine (GARM): Dr. Glenn C. Terry, an esteemed U.S. Board Certified Orthopedic Surgeon, renowned for his pioneering work in Olympic Sports Medicine, has founded the GARM Clinic.
Minicircle: is at a $100m valuation (investors e.g. Peter Thiel, Naval Ravikant, Sam Altman) and is used by clients like renowned biohacker Bryan Johnson. You can find info about the benefits & science about their follistatin gene therapy in this informative sheet.
4. Corporate Structure for Biotech Entrepreneurship (*not legal advice):
The easiest setup is:
Delaware C-Corp for Investment (the normal startup to IPO journey) as a topco
Prospera LLC as a subsidiary for clinical trials and delivering treatments
This structure will allow you to have access to mainstream VC, and utilize Prospera’s advantages in biotech. You can’t do much wrong with this structure, don’t innovate too much.
You could do a holding company for two purposes:
Investment topco that owns your Delaware company (LLC better than C-Corp)
1.1 Cayman Islands beats Prospera holdings here, since Prospera lacks wide acceptance
Personal wealth building topco for your assets (e.g. founder shares)
2.1 Prospera beats Cayman here, because if its lower complexity and cost
For your Próspera-based operations, you need:
Próspera Residency: create an account here, submit the application, wait for review (less than 5 business days). There are two types of residency e-residency ($130 / year), designed by the same team as the e-Estonia residency, and physical residency (Honduran citizens $260 / year & non-Honduran citizens $1300 / year)
Próspera LLC financial stack
Towerbank (Panamá) accounts [painful KYC] or personal account at Honduran bank BAC [best online experience]
You can only get BAC if you have a Honduran residency card, which takes a few months to get
Gnosis SAFE crypto wallet (see above)
Coinbase Wallet (personal)
5. Developing a New Protocol for Biotech Entrepreneurship
Biotech startups have a different trajectory compared to traditional startups. While startups in many industries aim to generate revenue early to validate market demand, biotech startups often undergo extensive product development phases before entering the market.
In the realm of "deeptech" startups, which require significant investment in product development, it is essential to minimize market risk. For instance, ventures that promise substantial cost reductions in energy production are more likely to attract significant investment and corporate success.
Although many biotech projects face high development costs, not all are inherently deeptech. Regulatory constraints often contribute to inflated drug development expenses, creating artificial entry barriers.
Due to the stringent regulations governing medical products, biotech firms often serve as outsourced research and development (R&D) entities for pharmaceutical companies, operating without revenue, customers, or market-ready products for extended periods.
Pharmaceutical corporations frequently acquire biotech intellectual property (IP) after prolonged product development cycles spanning over a decade. Selling to these industry giants becomes a practical choice for biotech startups, considering their formidable distribution capabilities and the challenges of competing with them post-development.
It's noteworthy to observe the longevity of top companies in the pharmaceutical industry. This endurance can be attributed to the significant barriers that startups face when attempting to compete across all aspects of a pharmaceutical company's operations, including advertising and marketing, as well as distribution and logistics.
The New Protocol
The goal of the new protocol is to make biotechs competitive with big pharma again.
Biotech is in many ways becoming more like software. Through the Vitalia acceleration protocol, biotech companies can be customer-facing much earlier in their lifetime. This allows them to innovate on the level of distribution much earlier by getting real feedback and direct market signals, like product revenue.
Current Protocol: $1bn+ and 10+ years to make it through the FDA process and get acquired by big pharma in Phase III-IV for hundreds of millions or small billions
Back-to-the-Future Protocol: In the past it took 3-6 months and cost 100k’s to get approval for new drugs & treatments, enabling startups be customer facing earlier
5.1 How is this Possible?
5.1.1 Animal Studies
Firstly, while more of the iterative approach from software development can be done in many aspects of biotechnology product development, there are some inherent constraints in the non-digital world when it comes to giving treatments to humans. A software bug doesn’t hurt anyone, a bug in a medical treatment can hurt the person taking it. To start with, a high level of confidence in safety should be already sought through preliminary assessments based on animal studies or related human data.
In the United States, this initial evaluation typically involves submitting an Investigational New Drug Application (IND). However, one significant hurdle associated with INDs is their cost, which can amount to approximately $150,000.
Regarding the procedures in Prospera, the GARM clinic noted that the process varies depending on the nature of the product, whether it's a drug, device, or other. For drugs, it's advisable to provide animal safety studies, although these may not have been conducted yet.
It's worth noting that not every company is required to conduct animal studies, as sometimes there is already sufficient safety data available on one or all components of the product, providing a high level of initial confidence in its safety profile.
5.1.2 Safety Trials
For the cost of a single Phase I clinical trial in the US, the same company could complete 10+ Phase I trials in Próspera to test the safety of potential life-changing and transformative interventions. Safety trials usually involve smaller groups of participants and focus on observing adverse events and tolerability.
This is not something uncommon. For example, Australia is a well-known jurisdiction for cheaper phase I trials.
5.1.3 Early Sales
Once the treatment has been deemed safe, the marketing of its promising data becomes crucial. Relying on deceptive tactics akin to selling snake oil would be ineffective in this close-knit community, populated by knowledgeable scientists. Additionally, the clinic's endorsement is essential, given their stake in maintaining their reputation, which could suffer if the treatment proves ineffective.
Moreover, attracting individuals to Honduras, despite Roatan's allure and safety, presents a psychological hurdle for many potential patients. Those initially willing to participate are likely to be highly educated in medical and biotech fields, making it imperative to provide compelling reasons for their involvement.
Minicircle, with its $100 million valuation post-stage 1 trial and revenue generated from over 200 paying customers, serves as an encouraging benchmark for startups in this domain.
Nonetheless, prioritizing the accumulation of credible efficacy data over time and gaining access to larger markets are critical objectives. Even with ambitious growth plans for Vitalia, reaching millions of people locally may not be feasible, highlighting the necessity of expanding into larger jurisdictions to achieve the status of a multibillion-dollar pharmaceutical company.
5.1.4 Efficacy Trials & Jurisdictional Access
We believe efficacy trials should not be required for pre-market approval prior to commercialization within Prospera, and neither should this approval be administered by one monopolized agency.
However, we do want to know if a treatment is effective.
Therefore, within Prospera’s jurisdiction we envision a system of unbundled clinical trials and various innovative ways of collecting data to show efficacy will prove to provide a better data set.
However, at stage 2+ you probably want to start diversifying. You can collect efficacy data in any way you want AND you want to check out phase 2+ trials in other jurisdictions.
U.S. market access is the big price. In the meantime, you can shop around for alternatives. From what we hear, Mexico, Dubai and Japan are open-minded jurisdictions for longevity treatments.
5.1.5 The Open-Endedness of the Protocol
The current protocol concludes here, with Minicircle being the most advanced entity in this regard. The potential success of Minicircle in obtaining FDA approval in the U.S. would hold significant value for any company operating within the Prospera ecosystem. However, delays in this process are not necessarily detrimental, as alternative jurisdictions can be explored.
Entrepreneurial spirit is encouraged in this context, urging companies to carve out their unique paths. Vitalia is committed to compiling and distilling insights from peer experiences to support and guide companies within the ecosystem.
5.1.6 The Risk of the Protocol
The protocol offers several advantages for biotech startups, notably minimizing risk exposure. With multiple opportunities available, the potential failure or reputational challenges within Prospera wouldn't significantly impact individual companies. Prospera's legal framework provides adequate protection, enabling startups to operate within established international legal standards.
At the early stages, the most valuable assets for startups are their human and intellectual capital. Expertise in developing groundbreaking drugs and the skilled teams capable of executing such projects constitute the core value. This intrinsic value remains intact even in the event of protocol failure.
Moreover, participation in the protocol can expedite a company's development process, potentially enhancing overall progress and outcomes.
6. An Emerging Biotech Hub in Central America
Law and governance is a social technology that enables large scale human civilization. Innovation in this area has stagnated for a long time, until now. And Prospera ZEDE’s legal innovation can make an enormous difference for longevity biotechnology development.
A new paradigm for biotech is emerging, spearheaded by Próspera and Minicircle. Vitalia and Infinita VC have been the ones building a protocol around this innovation.
If you’re building a human-focused biotech company, you can use this protocol.
This protocol, while in its early stages, may get you at least a $100m valuation. You can do it within accepted legal norms at low to no risk to you. The protocol will continue to develop, and Vitalia is your gateway to access that protocol. Let this article be your guide.
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