How Memorial Sloan Kettering Funds Its Cancer Fight
Under CIO Jason Klein, the celebrated hospital has leveraged its top-notch research and well-managed investments to produce still more breakthroughs.
Art by Simone Virgini
Cancer, sometimes called the Emperor of All Maladies, has long been a scourge upon humanity. The U.S. incidence of the disease, which had been falling, is now on the rise, with two million new cases in 2023, up from 1.9 million the year before, owing to a growing general population and more elderly.
The good news is that the number of cancer deaths continues to fall, the result of growing avoidance of causes (such as smoking), better early screening and more sophisticated treatments, according to the American Cancer Society.
At the forefront of the heartening medical developments is Memorial Sloan Kettering Cancer Center, ranked among the best oncology hospitals in the U.S., if not the world. It takes a lot of money to pay for the medical talent that fuels its prominence, which is where MSKCC’s canny and energetic investment office, led since 2008 by CIO Jason Klein, comes in.
Klein, the winner of CIO’s CIO of the Year Award for 2022, has managed to build what he calls “a fortress balance sheet” with net assets in 2023 of $9.2 billion, thanks to an annual investment return of just over 10%. A recent $218 million debt offering, to buy a nearby building that it has rented out for academic purposes, was rated a high-quality AA- from Standard & Poor’s.
Other organizations have good hospitals and research efforts, Klein says in an interview, “but none can harness research to patient care the way we can.” The institution’s mission is “ending cancer for life”—meaning eradicating the disease in individual patients’ bodies and in society as a whole. Amid the many advances that MSKCC has pioneered, for instance, is the chimeric antigen receptor therapy, which treats leukemia.
Klein credits the hospital’s new CEO (since September 2022), Dr. Selwyn Vickers, a pancreatic cancer surgeon, for “accelerating programs and innovations and collaborations between clinicians [doctors, nurses] and researchers.”
Well-Heeled Innovators
MSKCC’s income is also robust. The New York-based institution collected a healthy $7.3 billion in revenue in 2023, up 10.6% from the year before. Along with ballooning patient payments, donations surged. Since the pandemic, when giving to nonprofits fell, the hospital’s philanthropy receipts have bounced back and it now takes in around $500,000 in grants and contracts yearly, along with contributions of about $200,000 per annum. Over the past decade, the organization also has raked in $140 million in royalties on the 13 drugs it has patented.
In addition, MSKCC sponsors medical Ph.D. education programs geared toward understanding the biology of cancer, involving exploring its genes and proteins. It focuses on what it calls “engineering,” the invention of techniques and gear used to combat cancer. Key example: gene therapy to enlist the body in attacking malignant cells and nanotechnology, where tiny bodies can detect cancerous cells and counter them.
The hospital has enjoyed sturdy financial support throughout its history. Since its founding in 1884 by financier John Jacob Astor III and other wealthy folks, what’s now known as MSKCC has always functioned as a research center for cancer. The Rockefeller family donated the land on Manhattan’s Upper East Side, where it now is located.
In the 1940s, General Motors Chairman Alfred Sloan and GM’s research director Charles Kettering donated a bundle to the hospital to deepen its research efforts even more—and got their names affixed to the place. A passel of billionaires have pitched in with donations, including David Koch, Stanley Druckenmiller, Orlando Bravo and Mort Zuckerman.
And then there are the investments that pay off handsomely. MSKCC owned a small piece of Juno Therapeutics, which had an anti-cancer drug in an early regulatory phase involving T cells and the immune system. Then pharma giant Celgene bought the company in 2018 for $9 billion. (Bristol-Myers Squibb later purchased Celgene.)
Among the other biotech companies’ stock still in MSKCC’s portfolio are 191,000 shares of Y Mabs Therapeutics; like other biotech stocks, this one has fallen a lot, down almost 80% since its late-2020 peak. But the company has several cancer immunotherapies drugs under development using MSKCC patents. The hospital is collecting royalties from its patents, and if any of them take off, it will have a nice windfall.
What the Cache Buys
From its discoveries, MSKCC apportions the gains partly to the scientists who made the medical breakthroughs and partly for its own broader research needs. With a new drug, for instance, 30% of the proceeds from royalties and other income go to the inventors, 10% to MSKCC labs and 60% to other research. In companies in which the institution invests, it often has equity stakes, which benefit the hospital after an acquisition. “This is revenue that helps fund Memorial Sloan Kettering,” says Gregory Raskin, its senior vice president of technology development.
In all, MSKCC sponsors 130 research labs, and always is looking for new ways to counter cancer. This is a long road, both in terms of scientific challenges and regulations. “You could kill cancer in a test tube by pouring gasoline in it,” jokes Raskin. The hospital has 900 clinical trials ongoing, many of which will not pan out. Research scientists first need to cure test mice, then show the test is safe for humans and finally receive permission for a clinical trial from the U.S. Food and Drug Administration. The FDA is historically hard to please.
One of more promising recent MSKCC innovations is a vaccine that, in a Phase 1 clinical trial and using an mRNA molecule, seemed to boost an immune response in pancreatic cancer patients. Also, a pilot program is encouraging about a blood test that could detect multiple cancers at their earliest stages. Plus, fasting shows signs of an ability to jump-start the immune system to destroy cancer cells.
Having such a medical powerhouse to raise and manage money for is a big help to CIO Klein, who notes, “They’re the best in the world and they do phenomenal work.”
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