#DappCon22 : Day 2 - The DeSci Movement: How IP-NFTs And Biotech DAOs Are Democratising Medicine,

Transcript

so next we have Paul Cole Health he's a Serial entrepreneur Economist and web3 engineer on a mission to build public utility networks co-founder and CEO of molecule the merchandising biopharma research and development today he will talk about how IP nfts and the biotech dials are democratizing medicine please welcome to the stage thank you yeah [Applause] cool hi everyone my name is Paul cohass um as introduced I'm the founder and CEO of a company called molecule and we're kind of at the center of building this new decentralized science movement

um so in the following talk I want to kind of give you guys a rough overview of the why um of decentralized Science and what this movement aims to achieve we'll look at the problems definition and goals we'll then look into one specific vertical in the decentralized science movement which is a deep dive into intellectual property and funding we'll look at a very concrete example of where the space is today and what it's achieved and then also look at this being really an inflection point for the broader open science ecosystem um maybe before I yeah before I go deep a little bit of background I actually gave a first talk um at about kind of this vague Topic in this rough Topic at dapcon uh 2018 uh so we've come a really really long way of actually proving out that these systems

these systems might work a little bit of Background by myself um I really got into like online biohacking communities during my teens so these were different online communities for example in HIV and diabetes also looking at psychedelic compounds that were essentially trying to develop new medication kind of online in like these online communities and I found that really fascinating it went on and studied economics and then during that time was trading biotech stocks found that really fascinating and biotech stocks typically tends to trade at like the burn rate of the company um and and then you have positive data emerge about the the drug that they're developing and the stock goes 5x or you have negative data and it goes like minus 80 in a day so a lot of

similarities with uh with the cryptocurrency space actually and um then uh then yeah I got really interested in open source uh were to consensus for a while uh and then in 2018 left to found molecule uh so what are the big problems uh in in open science today so science today is full of problems on the one side we have funding today is highly competitive and asymmetric asymmetrically distributed it's very difficult for scientists to actually get funding to research the most the world's most pressing problems it's a very political process many scientists that we speak to for example say they spent 80 percent of their time fundraising and 20 doing the science so it's even worse than uh than being a startup founder science is often not

very replicable so when you have one scientist create a data set and then another scientist or a company tries to reproduce it they don't end up with the same results and so in science there's a very high propensity towards publishing only positive data and actually bearing the negative data um then signs funds science is very competitive in terms of publishing before someone else in terms of being the first one to have an idea and it's very difficult actually to verify by that today and then lastly science is actually largely inaccessible today to kind of our our modern awareness we're much more aware about what's happening maybe in football maybe on Instagram with like the latest influences we're not actually that aware of what's happening in

science because it's quite in transparent and a lot of these problems actually come from centralizing authorities in science today so this is a trend that we've seen in many other Industries like the banking industry for D5 we've seen it in the art world with nfts well now it's um and and with scientific with signs in essence is actually the government that is controlling a lot of scientific funding and then it's Industries like the Pharma industry for example that are fundamentally controlling what actually comes onto the market so what if science was more decentralized what would that world look like and then they're the question what is DSi so the decentralized science movement is really a movement that aims to create new public infrastructure for

funding creating reviewing crediting storing and disseminating scientific knowledge fairly and equitably using web free technology um that that's a that's a mouthful and we'll we'll digest more um what that actually means but why is it important so the centralized institutions over the past let's say 60 years this and this came about really in in World War one and World War II before World War one and World War II if science was actually pretty decentralized it was just a bunch of people a bunch of scientists across the ideas essentially essentially bringing ideas to life and disseminating scientific knowledge but around the first and second world where science really was kind of industrialized and centralized

um to to develop new technologies to support those War efforts but a lot of that actually those institutions and the bureaucracies that were built around the second world war have persisted until today uh and and that's created a lot of inefficiency in our modern scientific standing ecosystem so the decentralization of science is important because now users can participate in a trustless system in the same way that um we can participate in justice system and D5 it lowers the risk of systemic failure we've seen many systemic failures in science uh one recent example is uh for example a very long-term Alzheimer's studies where many different Alzheimer's drugs are being researched and then it fundamentally turned out that one of the earliest studies that unveiled one of those

indications was just completely wrong and so 20 years of research was almost invalidated so that's a big systemic failure for for a space it's censorship resistant and fosters in open culture so we are no longer able actually to suppress science suppress good ideas and it enables Global collaboration um and then maybe one way to think about this most of the world's potential scientific Talent today actually remains fundamentally untapped we have scientists MD phds Master students people running Laboratories across the world in different um in different academic institutions and they're fundamentally even struggling to get by the typical salary for like let's say someone who's doing their MD PhD can range between like

three or four thousand USD per month it's like it's one of the worst paid uh one of the worst paid positions um and now imagine if we treated scientists like we treat creators on Instagram today scientists are fundamentally creators but they they're one of the most underdeveloped Creator economies if we think about that but if you think about it they're one of the most important kind of stakeholder groups for society um yeah and so one goal of DSi is actually in the same way that open source software development or web3 enabled kind of software developers from the world to kind of come together and today someone can build a dab from a garage in Nairobi or from Silicon Valley there's actually no different and so in that

sense DSi actually aims to level the playing field between scientists for for Society for for patients for the people that need those outcomes so why why are we building these set to build an open science movement and to make signs more collaborative and accessible to everyone what are we building we're building a Global open alternative to the current scientific system that anyone can participate in in a very similar way as as defy did this for open financial services and how fundamentally using different layers of web free technology to raise funding to run experiments in the open like we just saw with laptop to share data and to distribute insights more openly so what does this all look like in practice we have different D side verticals that have been emerging over

the past um really over the past six to 12 months so this is a very new field and one of them is funding an IP another one is publishing uh publishing data publishing studies and then we have reproducibility of data and studies out in the open so essentially when someone else publishes a data set I should be able to almost run the code that produced that data set and end up with the same result and the last big component is identity and reputation essentially academic credentialing we're going to focus later on quite in depth on funding in IP and so now the D size space that is really emerging operates as a collaborative ecosystem in the same way and sorry I'm using D5 a lot as an example but um I I think it's there's

actually there's actually some level of similarity if you think of these systems really being open Lego blocks um so this is the current decentralized science landscape this is actually from I think from May or June so uh there might be a whole lot more on this on this page at this point already um but stuff is to say the space is growing quite quickly and it's gaining a lot of momentum uh and but by the way most of these projects are open like labda for example like molecule like read it out you can join these communities and actively begin contributing many of them are searching for developers many of them are searching for for investors or actually scientists and so essentially

each of these organizations are typically building a scientific Network in in a particular kind of field that that they want to that they want to change and as I mentioned earlier of these verticals funding in IP are currently seeing the lar the biggest amount of progress and we'll kind of look at how that how that works um so what is funding in IP more broadly so to conduct scientific research to run a study at a university or at a laboratory or even say if you're a biotech company you need funding to produce data and you typically raise funding on the basis of Distributing ownership in the underlying IP so if you think what does a

university really develop what what value comes out of all the scientific research it can be basic research insights that are for the public but as soon as something goes into commercialization where you think cool could we turn this into a new engine component or could this maybe be a life-saving drug then you're typically speaking about IP so the reason the fundamental value that is in a Pharma company for example is just a large portfolio of IP uh and essentially the Pharma company is now developing that IP to a point where it gets an approval from a regulating agency after having shown enough data that this particular drug or therapeutic is is safe to use in humans so we're currently seeing for example is the retroactive public goods funding um then we're seeing uh we're seeing

early forms of chronic funding for example there's currently a Bitcoin round running on decentralized signs where there's over 60 projects from across the world that have applied for this kind of funding then the third is funding through daos and tokenized incentive structures so essentially networks of people forming to collectively fund a public good uh and then the last one is um ipn FTS which is a which is a kind of a base infrastructure that my company molecule has been developing and we'll we'll look deeper into that now um maybe at a high level how does innovation and Drug development actually work today so if you think about it there are so many companies and so many

universities um out there in the world that are all trying to solve similar problems for example they're trying to cure a specific type of cancer and the typical drug development pipeline this process can take up to 10 years in today's system so just just imagine how long that is I mean I think the first when the first iPhone came out um what was this 15 years ago and this process it can actually take 10 to 15 years to bring a director market so the first iPhone came out that's up until now that's sometimes how long it can take to just develop One Drug um and the current system is actually very inefficient in kind of identifying targets so if you think about this this kind of as a funnel as a funnel of innovation where now that Innovation

funnel is being conducted in one company that company might have 10 targets for example to solve a specific type of cancer and then it Narrows those down to one specific Target in the end but now all of those companies are doing this research by themselves and it's CR and if you think about how science should work science should actually fundamentally be open so and this has to do with a fundamental problem with IP so actually if I'm developing a new medicine or a new drug I only have incentive to share positive data about that drug not necessarily the negative data because if I'm running about a company why would I tell other people that like the drug that they were developing is actually not working um often then those drugs that don't work get sold on to other companies that

try to take them further and ultimately fail in this in this pipeline so this pipeline today suffers from a lot of information and symmetry um an IP if we think about it as fundamentally a non-digital asset we our thesis is that IP today is broken the ipn patents are still physical assets you literally keep a box of papers from the government to like to like claim your IP um and then this monopolistic design of Ip that I just said really creates market failures it limits collaborations in terms of how organizations can work together to develop IP it limits open science negative data is not published and it's very hard to reproduce for example if I'm a company that is buying a let's say a drug from another company

because we want to develop it further that company will only show us the positive data not the negative uh and then there's an issue with price gouging of end users we've seen this over the past couple of years that drug prices have become continuously more and more and more expensive and it's it's essentially because IP fundamentally gives you the right to charge to to have a pricing function that's enforced by the violence of the government um one next big issue is these boxes of papers are not liquid it's very hard to actually transact in IP um but and and then IP valuations are very hard if you're developing an early stage therapeutic and it might work it might not work it's really a complete sum what what the value is for

these assets but for example an early stage cancer drug that has never even entered humans can often be worth an amount between 250 or 500 million dollars and it's never entered human so the IP on this curve like as we saw here the IP value actually grows exponentially as you as you go through these different phases so our fundamental mission of molecule is to really realign incentives in the system through decentralized biotech which is one of these verticals in in DSi and we consider this Market to be a function of supply and demand so on the supply side we have Innovation that's emerging all over the globe and on the demand side we have people patient advocacy groups maybe biotech investors

individuals that want to fund This research and then ultimately we want to make this research now demand and Supply coming together and ipnft can be formed we want to make that um fundamentally owned by communities and by daos so quick intro to molecule we're one of the leading disa infrastructure providers and DOW Builders we have about five dollars that we're actively building out at the moment in different therapeutic areas on our Marketplace you can kind of see a just a screenshot of it here we have over 100 different projects listed from universities across the globe that can actually now be funded through through Dows or through individuals um cool and so I'll go into the spaces of the kind of the biopharma ipnft so

there's been a lot of different I think applications already emerging around nfts Dynamic nfts um I think in the Art Space specifically um and so what we've been developing is a new form of ipnft which is the biopharma ipnft so it's a new fundraising mechanism for early stage research it's a technical framework in essence that combines nfts with Federated data storage and access control to the underlying data and it's a new legal framework um yeah little small blast from the past this is one of my slides from uh at dapcon 2018. this was still pretty kind of the development of kind of molecule as an idea but yeah the basic idea for this came from hey um what if instead of attaching a

picture of a cat to an nft we attach a marker structure so this like this little molecular design here is typically what you refer to as a marker structure it's essentially if uh that that you need for a composition of matter patent so if you design and kind of create an entirely new molecule that's the typical structure that you attach to a patent application and my basic thinking back then was what if we attach this to an nft and then actually what if we make the nft fungible through something like a bonding curve back then bonding curves were quite kind of big but they never really took off as a use case but they actually went into amms so you can now imagine if you take one of these ipn FTS and combine it with an amm as a Lego block

what would happen to that you essentially create discoverability of the asset so imagine now imagine if each of these if each of these like were ipn FTS and they were all publicly tradable so you could see live data coming in and you could essentially have people move in and out of these markets um so what is the basic anatomy of an ipnft um and by the way this this model is being applied in the wild already we've funded over about 2006 like full end-to-end University um but so an anatomy of an iPhone is essentially you have a legal component so it's a legal contract and real world license that's tied to the research or data so if you buy an ipn ft through our system you're actually buying like the

IP and the data rights from a laboratory from a university um yeah and then it's a storage component so there's a decentralized permanent data storage that has a public and a private layer the private side lives on filecoin and ipfs in a data storage component there and the public side is on our weave uh it's now transactable so you can now transact This research project between multiple parties and ultimately it's programmable so you can now program the IP to have governance rights to have fractionalization layers um programmatic royalties you can Implement pay for Success models um yeah this again kind of goes into like a more technical diagram of the different components so you have a legal

contract which is mapped onto a smart contract that is mapped onto metadata and Json and then you have what's encrypted on filecoin is essentially the I actually IP patent and data so you can kind of imagine this as like a as like a uh it's like a decentralized private GitHub repo where now different collaborators around the ipnft can plug in and co-develop an asset together and this is this is completely Brown breaking and Pharma you can also transact you can transfer this asset down within five minutes um if like let's say if all the legal checks out but this is a process that could typically take up to six or nine months with ndas multiple rounds of lawyers to actually transact one of

these assets so these first ipnf2 is essentially transfer and finance research and IP at early stages without needing to patent to create a startup or to raise Venture financing and these ipfts are much more data Rich so you can due diligence the Assets in a much more transparent and open science fashion I'm going to speed up a little bit just because we're running out of time so this is a typical pathway of how we envision one of these ipnfts going to Market essentially at different stages you now have different groups of collaborators or Dows plugging in to co-develop the IP Nifty and then we fundamentally see these as web 3 Lego blocks in defy and Dows as I said you can we're now seeing dials already built portfolios of these IP nfts you can fractionalize these ipnfts

you can have these research data folders and you can really make drug development much more modular and all of this we see all of this coming together essentially in a decentralized Marketplace that we're actively building out sorry for the low res essentially where these different research projects are listed you can kind of Imagine like an open c for these different biotech research projects uh and who's using this today uh so there's a really great example I think Vita Dao is one of the leading um uh leading longevity dials in the space uh so to date it's funded over 14 projects with two and a half million dollars there's over 20 projects on the review 7 000 members in the Dow uh it's got in total about seven and a half million in assets

um it's created a really active essentially research Community researching longevity and aging Therapeutics um and so Vita essentially functions through having a deal flow working group that now consists of researchers all over the world that are paid in Vita Dow tokens and they essentially bring their IP through their laboratory Network through their academic networks together into the Dao and then read the token holders now actively vote and review and curate these projects and the end effect is that redidau is today building one of the leading IP and research portfolios in the longevity space um yeah two and a half million funded today this is how this typically looks like for example on on Snapshot video uses gasless trustless voting

um it's funded funded various different assets some of them in equity some of them in ipnft but there's a strong um a strong move towards ipft recently one was the University of Copenhagen um this was in this was last summer already so now we're seeing first really good data actually emerged from this project another one was the University of Oslo there's one with the University of Washington that happened I think about three weeks ago there's another one with the sense foundation and essentially this funnel is now rapidly increasing so the Dao is essentially like a vacuum now in web 3 that is sucking some of the most promising real world Research into web3 and the cool thing is once it's in web 3 any real industry participant has to kind of come to web3 to get it out again into the

real world um and fundamentally what this is doing now this is really democratizing ownership of of core intellectual property and new medicines that are actively being developed um we've had a lot of learnings already so if you want to I'm happy to go more deeply into this like what it actually means to build a designer what it means to build as Nicholas said previously a functioning decentralized research organization uh one core learning is the academic community and the research Community is the most important resource of the bow so you really need to build and cultivate a culture a web free culture where those people and those stakeholders in that culture is well taken care of so where are we today um DSi is really at a core inflection

point and with that I mean I mean first we're seeing a um kind of a Cambrian explosion of projects that are launching in the space but also and this happened much much sooner than we we believed so you have now all of these all of these IP projects that are entering the dial and once they enter the dial they're going to stay there at least for a year or two so they're almost taken off the market so if you want to play in this market now and you you think like hey this there could be a groundbreaking new longevity treatment emerging here you have to kind of join and work with the dam and that's where we're at an inflection point um so the biotech Industries actively joining these D side hours already so this is an article from last week uh no two weeks ago where Pfizer Pfizer the

Pharma company actively is in a governance process to apply to join vidad and the reason why Pfizer is joining Vita Dao is because a they find it extremely fascinating how these researcher networks uh you can think yeah these researcher networks and neurons kind of come together and form in the context of a tao because this is actually something that Pfizer has been trying to do for decades and they failed at it they're failing to the culture and the incentive system to actually build an inclusive economy for scientists it's almost like if you joined Pfizer as a scientist and Pfizer gave you a bunch of Pfizer shares but they're never going to do that so they're really interested in that and the second thing is though they're actually really interested in just go back again in the IP they're

really interested in the IP that's developing and with an interest actually buy the IP from the dial and if Pfizer in our approach is read it out and says hey this is a really interesting project we'd love to buy it then for example vita.com now fund a project for 300 000 and then sell it to Pfizer for 5 million because the value appreciation in in early stage drug Discovery is actually very high very quickly or vidad and its token holders can say no we want to keep this we want to open source it for the good of humanity we believe that these drugs shouldn't be commercialized um and what we're now seeing um essentially what's going to happen is what we're trying to do is build out these dials now in different therapeutic areas so we have one already being built

in synthetic biology and biomanufacturing there's another one being built in mental health and and psychedelic research there's a sidear the one before in sinbio is valid hour there's another one focused on women's reproductive Health called athenida and what we're now doing is we're essentially creating a like a biotech dial launch pad and decentralized Community to essentially help these dials build viable biotech business models um and essentially integrate web 3 and the way that they work into the real world if you're interested to learn more about that um come check out bio.xyz which is essentially this new biotech dial launch pad [Music] um last last couple of sentences where are we today there's significant investment

pouring into DSi and also a lot from non-traditional web3 investors so lots of Biotech investors are actually taking note here and these are these are funds and people that never cared about Bitcoin they never cared about ethereum but they're fundamentally buying into this new notion of decentralized science because the effects could be profound many researchers are coming into design that are fed up with their academic posts that are just it's almost like if you're a software developer working at IBM and you find out about ethereum that's kind of the that's kind of the discovery process that these researchers are going through there's tons of new projects and Builders there's also a lot of hype many of these DSi Founders are first-time startup Founders that have just left Academia so you can imagine

kind of the complexity for these people um we the space needs a lot of experienced Builders to actually make this a success um and then we need to avoid the mistakes of tradside so not Trad five but trattsai essentially rebuilding similar um cultural practices or like centralized bureaucracies that we've actually that we have in science today um cool and I'm over time and uh big thank you to all of you for being interested in decent class science thank you Paul I think we have time for one or two more questions if you have foreign

yeah okay um so would you say that then uh when you were explaining about Vita Dao and everything would you say that we can also look at Vita Dao is some kind of the future investment Dallas that would be focused more on the biotech research do you see like the the growth of the ecosystem in that way um or am I missing some of the the deals there yeah and that's that's one way essentially to look at Vita dial but another way to look at it is almost like a decentralized laboratory because we did that is not like it's not a fund with like five or six people that are being like we should invest in this we should invest in this but it's like it consists of like 60 to 80 diff scientists leading scientists from all over the world that

are actively very actively working on these research projects as well so around a research project you might have a group of five or six scientists form and now they actively work with the scientists the scientist also joins the Dao and they actively work kind of to define the next steps of the research which is much more that what a Pharma company or a biotech company would actually do so and it's almost this this is also interesting where lab dial kind of plugs in it's like building these decentralized laboratory services that now make Collective investment and funding decisions so it's kind of like a mix between an investment now but also much more like a network of researchers that actively work to democratize their research okay and just the following there in European and let's imagine as

an example that you give let's imagine that we as adults fund amazing research there and Pfizer Weller comes and actually want to buy the IP for a really really lump sum of money how do you see the governance around that and who would be parties involved in the huge discussion okay are we doing this or not and who should have the saying and in which way you think we should implement the governance around these particular questions yeah absolutely a great question um it's actually something I think that we'll only we'll see play out over time um but the Dao in essence is fully decentralized and so even Pfizer wanting to join the dial Pfizer has to apply so it put up a even just think about this so Pfizer is making a post on discourse

to like apply to join the Dao and then there's different Anonymous members of the Dao answering and asking Pfizer all these difficult questions and now in about three weeks or two to three weeks the doubt will vote whether to include Pfizer in the Dao and Pfizer is investing investing half a million that is contributing into the treasury of the doubt now at a future Point all that Pfizer can do is vote with its governance tokens which I think in this case would be about 0.5 percent of the token Supply a little bit less vote with its tokens to like support their proposal but all other token holders could vote no so it's essentially the same political process that you would have in other dials um I actually think if I actually think as a success metric for the biotech

world it would be a huge success if if we did I was able to like sell one of its assets at a later stage to Pfizer But ultimately it's really up to the Token holders if the token holders think no we don't want Pfizer to own This research the torque notice could decide to open source it let's say we did our magically discovered like a pill that makes you live forever the fountain of youth pill and then we did that could say actually this should never be commercialized we want this to be open accessible to humanity and we're just going to open source all of the IP essentially destroying the IP value um and actually because we did that like so token holders don't have that they don't have actually rights to the underlying proceeds from the IP so it's really a pure governance token but they

can decide what to do with those proceeds so token holders can decide to like not commercialize the IP or they can decide to commercialize the IP and then it's probably um with ipn FTS then you can have a similar bidding process as on openc you could for example say cool Pfizer is bidding 5 million on this ipn ft and that triggers an auction and now there's a public auction running maybe someone else actually comes and says cool I'm going to bid 7 million and so you get similar Dynamics as you might have in in nft marketplaces which for pricing ipe would actually be really really efficient and and much more transparent so the whole world could see cool Pfizer just bought this acid um yeah we have time for one very short question

and very short answer I have to be short but on a follow-up um how do you deal with IP nft conflicts uh historically the pharmaceutical industry has been plagued with people contesting um research or claiming ownership and um in in the real world you can always submit claims to patents and go through Bevy of lawyers how do you deal with something like that at a former level especially post pandemic with DSI yeah good question so uh there's the web 3 answer I mean there's there's sophisticated arbitration mechanisms already in web3 if you look at systems like clearos but I don't think they're going to hold up in the real world um so there's there's I think interweb

three and then there's actually everything external and so all of these ipnfts are actually ledgered in real world legal agreements uh and but but the IP can infinitely be transferred for example through those label agreements it's like you make a sub license of a sub license of a sub license and that travels on but it lives in the real world and so these Agreements are the same agreements that like a biotech company would use when they spin out IP from a university so University of Washington says cool we will out license this IP to this company and it we use those same type of legal agreements so if if like if an arbitration case or like if a dispute was to arise we're relying currently on the same legal legal mechanisms um to solve this what Vita for example

does video works with specialized IP law firms in the jurisdictions that it operates in so if it has a deal in the US it'll operate with a U.S Law Firm like Greenberg Trower if it has a deal in Europe it will operate with a European IP law firm and then those law firms ensure that the same the same standards that we see in the legal industry are applied there and then there's a Crux where essentially the IP is put into a sub license and can then travel through the energy the big the only big risk I think with these systems is that you could have leakage of the IP um but you can you can have that in the real world as well if I work at a startup and like I I like I know about some of their most promising IP that they found and I leave that startup and

like steal the IP and create my own company they consume me and so with the ipn Ft actually that whoever has access rights has entered similar NDA structures as you would in the real world and so if you break those agreements and you like leak the IP then you can be prosecuted um that's actually that's I think where where actually you raise a really good point that's where DSi is still clunky like things are more clunky than let's say in a purely trustlessly permissionlessly defy world because you still have permission access through these legal agreements but also you need them because if you don't have them then you can't like play the game you can't like be in this field um but already with what we're seeing

like automating those legal agreements and then providing distributed Access Control brings so so much efficiency to the space um but I think the hope is over time actually that actually like if you can really obfuscate the IP through zero knowledge proofs for example you could have a world where you don't really need legal agreements anymore in ipn FTS so for example if if I can access let's say the data storage to use your knowledge proofs and so I would ask does this molecule exist in the universe and B for example does it have the data to like is the data there that it says in pre-clinical trials that it cures cancer just as an example and if I run a zero knowledge proof algo and the algorithm says yes the molecule

exists and yes it can cure cancer I've seen the data and it returns that to me then I could buy the IP without knowing the identity of the molecule or the or the actual underlying data and that could actually make patents much more obsolete or really push patenting down Downstream which has a lot of economic effects that we can go into as well but I'll leave it there thank you so much for the question thank you thank you Paul thank you thank you so [Applause]