University Chemistry Prof. David Sherman said he's confident the drug he developed will be more effective at treating lung, breast and ovarian cancer than existing medications. But until his lab can prove that it can be manufactured cheaply in large amounts, the treatment will sit on the shelf.

"We know it'll work," he said. "We just need to get more of it and do it on larger scale, and essentially industrialize it."

The University's Life Sciences Institute has begun a new program called the "Innovation Partnership" to provide scientists with the necessary funding to advance their research so it is attractive to private investors.

"The process by which a small molecule is brought from a model to a clinical trial is a long and expensive project," said University Pathology Prof. Andrew Lieberman, whose work on currently untreatable brain diseases like Alzheimer's has so far has been funded through private grants. While Lieberman and his research partner Jason Gestwicki say they may have found a way to treat Huntington's, he said, their work isn't yet developed enough to draw investment from biotechnology companies.

University researchers say the Innovation Partnership will bridge a gap that often forms between public funding for basic research and private funding for commercial medicines.

"(Research) foundations usually don't have the resources to give the kind of grant dollars that this partnership is going to give to the researchers at the University," said Lieberman.

LSI has received about $1.6 million in private donations for the program. Institute officials hope to reach $10 million in five years. The money will be distributed to researchers in grants ranging from $200,000 to $500,000 each.

LSI Director Alan Saltiel said the program will begin disbursing grants at the end of this year.

Saltiel said that a committee for the Innovation Partnership will evaluate research to distinguish which labs have the most potential for medical breakthroughs. The Innovation Partnership will provide the funding to these researchers to attract venture capitalists.

Investors are often hesitant to fund experimental drug labs because of the volume and uncertainty of medical research, he said.

"The kind of support that used to be there for very early ideas that might be the foundation of a new company just isn't there any more," Saltiel said. "Investors have looked back over the last 10 years and looked at their returns and concluded that their returns just aren't there."

Sherman said he plans to attract private investors and start his own biotechnology company in Ann Arbor if he can show that his drug will be cost-effective.

"We've already moved ahead with plans to build a start-up," he said. "These innovation funds would be a perfect transition strategy."

Saltiel said he hopes that projects funded by the Innovation Partnership will eventually donate money back into the Innovation Partnership so that it can eventually support itself without depending on investors. Either way, if early projects prove successful, they will also attract more money as donors recognize the effectiveness of the program, he said.

Every disease researcher's dream, Lieberman said, is to make an impact on patient treatment.

"This is a way that the University is really giving us a good chance to do that," he said.