New Funding Models for Biomedical Innovation（英文）行业资料

Webinar

NewFundingModelsfor

BiomedicalInnovation

AndyLo

MIT

MarkusBrunnermeier

Princeton

HostedfromPRINCETON

ForEVERYONE,WORLDWIDE

4.February2021

Innovation

1Non-rivalryofideas(design/blueprints)

1Waterbottle,butideaofralrehydrationtherapy(PaulRomer)(rightproportionofsaltinwatertofightdiarrhea)

1R&Dexternality>0underinvestment

2

Innovation

State

1Non-rivalryofideas(design/blueprints)

1Waterbottle,butideaofralrehydrationtherapy(PaulRomer)(rightproportionofsaltinwatertofightdiarrhea)

1R&Dexternality>0underinvestment

1Interplayof

entrepreneur

VCfunding

capitalists3

InnovationandtheGovernment

4

1BasicResearch

1Longhorizon,highriskofinvestment

1Costsubsidy

1Demandpull/guarantee

1Patentprotection:Granttemporarymonopoly

1Pricediscrimination

1Withholdhealthfromthepoor(immoral)

1X-PrizeMichaelKremer

1Riskabsorption(“de-risking”)

1Coinvest(alsoviataxes)

2Innovationmodels

1Oldmodel:Largecooperation

R&Dexpenditures

1Betterrisksharing

1Start-upModel

1R&Dinsmallstart-ups

1Largefirms

takeoversuccessfulstart-ups

uselargedistributionnetwork

5

Innovation,Risk,andFinance

1Welcomefailurevs.bankruptcystigma

Promotingrisktakingvialimitedliability

vs.ordoliberal“liabilityprinciple”orstigma

1Implieshigherinterestrate

1Venturecapitalism

1Optimalrisksharing+realoptions

1Expertise/advice

6

NewFundingModelsfor

BiomedicalInnovation

AndrewW.Lo,MIT

Markus’Academy,BendheimCenterforFinance

PrincetonUniversity4February2021

MIT

Laboratoryfor

FinancialEngineering

4Feb2021

Slide2

May27,2016

BiomedicineIsAtAnInflectionPoint

“Iwentoutsidewhenitwassnowing,andIwaslike,

‘Oh!Icanseethesnowflakes!’”Carolinesaid.“It

wasreallycooltoactuallyseesomethingthatI've

neverseeninmylifebefore.”

©2021byAndrewW.Lo

AllRightsReserved

Slide3

BiomedicineIsAtAnInflectionPoint

©2021byAndrewW.LoAllRightsReserved

4Feb2021

The“omics”Revolution:

Slide4

1Genomics

1Epigenomics

1Transcriptomics

1Proteomics

1Metabolomics

1Microbiomics

BiomedicineIsAtAnInflectionPoint

Economics??

©2021byAndrewW.LoAllRightsReserved

WhatAbout

4Feb2021

CumulativeReturn

4Feb2021

Slide6

$35

FairfieldSentry

InvestmentPopQuiz#1

U.S.TreasuryBills

StockMarket

Pfizer

SR=0.43

SR=2.98

SR=0.54

$30

$25

$20

$15

$10

$5

$0

Nov-90Nov-93Nov-96Nov-99Nov-02Nov-05Nov-08Nov-11Nov-14Nov-17

©2021byAndrewW.Lo

AllRightsReserved

ConsiderTheFollowingInvestmentOpportunity:

−100%w.p.95%

InvestmentPopQuiz#2

1Probabilityofpositivepayoffis5%SR=0.02

1$200MMinvestment,10-yearhorizonE[R]=11.9%SD[R]=423.5%

1Ifsuccessful,annualprofitsof$2Bfor10-yearpatent

w.p.5%or

+51%

Slide7

©2021byAndrewW.LoAllRightsReserved

4Feb2021

FinancialEngineeringCanHelp

WhatIfWeInvestIn150ProgramsSimultaneously?:

1Requires$30Bofcapital

1AssumeprogramsareIID(canberelaxed)

1Diversificationchangestheeconomicsofthebusiness:

1Butcanweraise$30B??SR=0.34

1Itdependsontheportfolio’srisk/rewardprofile(correlations?)

Slide8

4Feb2021

©2021byAndrewW.Lo

AllRightsReserved

4Feb2021

Slide9

FinancialEngineeringCanHelp

WhatIfWeInvestIn150ProgramsSimultaneously?:

1Withreducedrisk,debt-financingisfeasible!MaximumMaximum

Year-0

Proceeds

at1.56%

(BofAMLAA10-Yr

asof1/31/21)

Year-0

Proceeds

at2.16%

(BofAMLBBB10-Yr

asof1/31/21)

Maximum

Year-0

Proceeds

at1.64%

MinimumYear-10

(BofAMLA

10-Yrasof

Event

ProbabilityNPV

1/31/21)

AtAtAtAtAt

least1hit:99.95%

least2hits:99.59%

least3hits:98.18%

least4hits:94.52%

least5hits:87.44%

$12,289

$24,578

$36,867

$49,157

$61,446

$10,527$21,054$31,580$42,107$52,634

©2021byAndrewW.LoAllRightsReserved

$10,444

$20,888

$31,333

$41,777

$52,221

$8,501

$17,003

$25,504

$34,005

$42,507

4Feb2021

Slide10

ICEBankofAmericaSingle-AU.S.CorporateIndexEffectiveYield

Dec31,1996toJan31,2021

FinancialEngineeringCanHelp

©2021byAndrewW.Lo

AllRightsReserved

Prob(nNk)forEquicorrelatedBinomial(150,5%)

Slide11

FinancialEngineeringCanHelp

1.0

0.0

ρ=0%

ρ=10%

ρ=40%

ρ=80%

k

=12

4Feb2021

34567891011121314151617181920212223242526

©2021byAndrewW.Lo

AllRightsReserved

Diversification

canlowerthecostofcapital

500-DayRolling-WindowBetas

Slide12

InvestmentPopQuiz#3

25Nov1996to17Sep2020

Beta

2.01.21.00.20.0

PharmaBiotech

11/25/1996

11/25/1997

11/25/1998

11/25/1999

11/25/2000

11/25/2001

11/25/2002

11/25/2003

11/25/2004

11/25/2005

11/25/2006

11/25/2007

11/25/2008

11/25/2009

11/25/2010

11/25/2011

11/25/2012

11/25/2013

11/25/2014

11/25/2015

11/25/2016

11/25/2017

11/25/2018

11/25/2019

4Feb2021

©2021byAndrewW.LoAllRightsReserved

WhyDo

BiotechsHaveSuchHighBetas??

4Feb2021

Slide13

FAQs(details,details…)

1Dowereallyneed$30billion?

1What’sthemarketfailure;whyhasn’tthisbeendonealready?

1Isn’tpharmaalreadydoingthis?Ifnot,isn’tgovernmentdoingit?

1Isthereenoughcapacity(projects,capital,andpeople)?

1Isn’tbiomedicinetoocomplextomanageasalargeportfolio?

1Arethereanyothersimilarindustriesthatusethesetechniques?

1Howaboutdrugpricing?Canweaffordthesetherapies?

1Whatrolecan/shouldgovernmentplay?

1Arethereexistingexamplesofmegafunds?

©2021byAndrewW.Lo

AllRightsReserved

ShortAnswer

ShortAnswer

ShortAnswer

4Feb2021

Slide17

LongAnswer:

1Cancer:Fernandez,Stein,Lo(2012),DasandLo(2017),Das,Rousseau,Adamson,Lo(2018),

Chaudhuri,Cheng,Pepke,Rinaudo,Roman,Spencer,Lo(2019),Alexanderetal.(2019),Wong,Siah,

Lo(2019)

1Alzheimers:Lo,Ho,Cummings,Kosik(2014)

1VaccinesandAnti-Infectives:Vu,Chaudhuri,Kaplan,Mansoura,Lo(2019),Wong,Siah,Lo(2020)

1Guarantees:Fagnan,Stein,Fernandez,Lo(2013)

andLo(2016),Das,Huang,Lo(2019),

1Rarediseases,NCATS:Fagnan,Gromatzky,Stein,Lo(2014),Fagnan,Yang,McKew,Lo(2015),Kim

1Dynamicleverage:Montazerhodjat,Frishkopf,Lo(2015)

1Drugmortgages:Montazerhodjat,Weinstock,Lo(2016)

(2018),Isakov,Lo,Montazerhodjat(2019),ChaudhuriandLo(2020),Xu,Chaudhuri,Xiao,Lo(2020)

1Clinicaltrialdesign:Montazerhodjat,Chaudhuri,Sargent,Lo(2017),Chaudhuri,Sheldon,Irony,Ho

1Estimatingandforecastingclinicaltrialoutcomes:Wong,Siah,Lo(2019,2020a,b),Siah,Wong,Lo(2019,2020)

https://bit.ly/3oDzxI1

©2021byAndrewW.Lo

AllRightsReserved

MustCollaborate

4Feb2021

Slide18

TheAmountofCapitalNeededDependsOn:

HowMuchCapitalDoWeNeed?

1CostpershotSiahandLo(2020)

1Probabilityofsuccess

https://bit.ly/33Fpqdh

1DurationoftrialsSourcecode:

1Correlationofshots

1Profitspersuccess

FinanceandBiomedicalExperts

©2021byAndrewW.Lo

AllRightsReserved

4Feb2021

Slide19

OrphanDiseases

1Oftenduetomutationinasinglegene,e.g,hemophilia,cysticfibrosis,ALS,Gaucher,paroxysmalnocturnalhemoglobinuria

130millionAmericanssufferfromover7,000rarediseases

1Smallerpopulation,urgentneed,higherprices,lowerdevelopmentcosts,highersuccessrates(25%),fasterapprovals(3–7years),1983OrphanDrugAct,etc.

1$400–$500millionofcapitaland10–20projectsaresufficient

LackofCorrelationIsCritical!

©2021byAndrewW.Lo

AllRightsReserved

McKew

,Lo(2015)

Slide20

Fagnan,Yang,

4Feb2021

©2021byAndrewW.Lo

AllRightsReserved

4Feb2021

Slide21

NewBusinessModelsAreEmerging

2Feb2021

Jan3,2017

©2021byAndrewW.Lo

AllRightsReserved

Slide22

NewBusinessModelsAreEmerging

4Feb2021

©2021byAndrewW.Lo

AllRightsReserved

Slide23

NewBusinessModelsAreEmerging

4Feb2021

©2021byAndrewW.LoAllRightsReserved

BioBondsin

2021??

Slide24

Conclusion

IWantToBeHarveyLodish!

FinanceDoesn’tHaveToBeA

Zero-SumGame

4Feb2021

©2021byAndrewW.LoAllRightsReserved

Withtherightkind

offinancingandat

therightscale,we

candowellby

doinggood!

Thank

You!

@AndrewWLo

4Feb2021

Slide26

AdditionalReferences

1Bisias,Dimitrios,AndrewW.Lo,andJamesF.Watkins(2012),EstimatingtheNIHEfficientFrontier,PLoSONE7(5),e34569.

1Fernandez,Jose-Maria,RogerM.Stein,andAndrewW.Lo(2012),CommercializingBiomedicalResearchthroughSecuritization

Techniques,NatureBiotechnology30(10),964–975.

1Fagnan,DavidE.,Jose-MariaFernandez,AndrewW.Lo,andRogerM.Stein(2013),CanFinancialEngineeringCureCancer?,AmericanEconomicReview103(3),406–411.

1Fagnan,DavidE.,AustinA.Gromatzky,RogerM.Stein,Jose-MariaFernandez,andAndrewW.Lo(2014),FinancingDrugDiscoveryforOrphanDiseases,DrugDiscoveryToday19(5),533–538.

1Fojo,Tito,ShamMailankody,andAndrewW.Lo(2014),UnintendedConsequencesofExpensiveCancerTherapeutics-ThePursuitofMarginalIndicationsandaMe-TooMentalityThatStiflesInnovationandCreativity:TheJohnConleyLecture,JAMAOtolaryngology-HeadandNeckSurgery140(12),1225–1236.

1Lo,AndrewW.,CaroleHo,JaynaCummings,andKennethS.Kosik(2014),ParallelDiscoveryofAlzheimer’sTherapeutics,ScienceTranslationalMedicine6(241),241cm5.

1Lo,AndrewW.,andSouryaV.Naraharisetti(2014),NewFinancingMethodsintheBiopharmaIndustry:ACaseStudyofRoyaltyPharma,Inc.,JournalofInvestmentManagement12(1),4–19.

1Fagnan,DavidE.,N.NoraYang,JohnC.McKew,andAndrewW.Lo(2015),FinancingTranslation:AnalysisoftheNCATSRare-DiseasesPortfolio,ScienceTranslationalMedicine7(276),276ps3.

1Forman,SandraM.,AndrewW.Lo,MonicaShilling,andGraceK.Sweeney(2015),FundingTranslationalMedicineviaPublicMarkets:TheBusinessDevelopmentCompany,JournalofInvestmentManagement13(4),9–32.

©2021byAndrewW.Lo

AllRightsReserved

4Feb2021

Slide27

AdditionalReferences

1Fojo,Tito,andAndrewW.Lo(2016),Price,Value,andtheCostofCancerDrugs,LancetOncology17(1),3–5.

1Kim,EstherS.,andAndrewW.Lo(2016),BusinessModelstoCureRareDisease:ACaseStudyofSolidBiosciences,Journalof

InvestmentManagement14(4),87–101.

1Lo,AndrewW.,TomasJ.Philipson,andAndrewC.vonEschenbach(2016),Health,Wealth,andthe21stCenturyCuresAct,JAMAOncology2(1),17–18.

1Lo,AndrewW.,andGaryPisano(2016),LessonsFromHollywood:ANewApproachtoFundingR&D,SloanManagementReview57

(2),47–57.

1Montazerhodjat,Vahid,JohnJ.Frishkopf,andAndrewW.Lo(2016),FinancingDrugDiscoveryviaDynamicLeverage,DrugDiscoveryToday21(3),410–414.

1Montazerhodjat,Vahid,DavidM.Weinstock,andAndrewW.Lo(2016),BuyingCuresversusRentingHealth:FinancingHealthCarewithConsumerLoans,ScienceTranslationalMedicine8(327),327ps6.

1Burnham,TerenceC.,SamuelHuang,andAndrewW.Lo(2017),PricingforSurvivalintheBiopharmaIndustry:ACaseStudyofActharGelandQuestcorPharmaceuticals,JournalofInvestmentManagement15(4),69–91.

1Das,Sonya,andAndrewW.Lo(2017),Re-InventingDrugDevelopment:ACaseStudyoftheI-SPY2BreastCancerClinicalTrialsProgram,ContemporaryClinicalTrials62,168–174.

1Kim,EstherS.,PaigeM.C.Omura,andAndrewW.Lo(2017),AcceleratingBiomedicalInnovation:ACaseStudyoftheSPARKProgramatStanfordUniversity,SchoolofMedicine,DrugDiscoveryToday22(7),1064–1068.

©2021byAndrewW.Lo

AllRightsReserved

4Feb2021

Slide28

AdditionalReferences

1Montazerhodjat,Vahid,ShomeshE.Chaudhuri,DanielJ.Sargent,andAndrewW.Lo(2017),UseofBayesianDecisionAnalysisto

MinimizeHarminPatient-CenteredRandomizedClinicalTrialsinOncology,JAMAOncology3(9),e170123.

1Thakor,RichardT.,NicholasAnaya,YuweiZhang,ChristianVilanilam,KienWeiSiah,ChiHeemWong,andAndrewW.Lo(2017),JustHowGoodanInvestmentIstheBiopharmaceuticalSector?,NatureBiotechnology35(12),1149–1157.

1Chaudhuri,ShomeshE.,MartinP.Ho,TelbaIrony,MurraySheldon,andAndrewW.Lo(2018),Patient-CenteredClinicalTrials,DrugDiscoveryToday23(2),395–401.

1Das,Sonya,RaphaëlRousseau,PeterC.Adamson,andAndrewW.Lo(2018),NewBusinessModelstoAccelerateInnovationinPediatricOncologyTherapeutics:AReview,JAMAOncology4(9),1274–1280.

1Chaudhuri,ShomeshE.,KatherineCheng,AndrewW.Lo,ShirleyPepke,SergioRinaudo,LyndaRoman,andRyanSpencer(2019),APortfolioApproachtoAccelerateTherapeuticInnovationinOvarianCancer,JournalofInvestmentManagement17(2),5–16.

1Das,Sonya,SamuelHuang,andAndrewW.Lo(2019),AccelerationofRareDiseaseTherapeuticDevelopment:ACaseStudyofAGIL-AADC,DrugDiscoveryToday24(3),678–684.

1Hull,John,AndrewW.Lo,andRogerM.Stein(2019),FundingLongShots,JournalofInvestmentManagement17(4),1–33.

1Isakov,Leah,AndrewW.Lo,andVahidMontazerhodjat(2019),IstheFDATooConservativeorTooAggressive?:ABayesianDecisionAnalysisofClinicalTrialDesign,JournalofEconometrics211(1),117–136.

1Lo,AndrewW.,KienWeiSiah,andChiHeemWong(2019),MachineLearningwithStatisticalImputationforPredictingDrugApproval,HarvardDataScienceReview1(1)./10.1162/99608f92.5c5f0525.

1Lo,AndrewW.,andRichardT.Thakor(2019),RiskandRewardintheOrphanDrugIndustry,JournalofPortfolioManagement45(5),

30–45.

©2021byAndrewW.Lo

AllRightsReserved

4Feb2021

Slide29

AdditionalReferences

1Siah,KienWei,SeanKhozin,ChiHeemWong,andAndrewW.Lo(2019),Machine-LearningandStochasticTumorGrowthModelsforPredictingOutcomesinPatientsWithAdvancedNon–Small-CellLungCancer,JCOClinicalCancerInformatics3,1–11.

1Wong,ChiHeem,KienWeiSiah,andAndrewW.Lo(2019),WhatAretheChancesofGettingaCancerDrugApproved?,DIAGlobal

Forum,May.http://bit.ly/2pUuBWs.

1Wong,ChiHeem,KienWeiSiah,andAndrewW.Lo(2019),EstimationofClinicalTrialSuccessRatesandRelatedParameters,Biostatistics20(2),273–286.

1Chaudhuri,Shomesh,AndrewW.Lo,DanyingXiao,andQingyangXu(2020),BayesianAdaptiveClinicalTrialsforAnti-Infective

TherapeuticsDuringEpidemicOutbreaks,HarvardDataScienceReview,COVID-19SpecialIssue1.

/10.1162/99608f92.7656c213

.

1Lo,AndrewW.,KienWeiSiah,andChiHeemWong(2020),EstimatingProbabilitiesofSuccessofVaccineandOtherAnti-Infective

TherapeuticDevelopmentPrograms,HarvardDataScienceReview,COVID-19SpecialIssue1.

/10.1162/99608f92.e0c150e8

.

1Smith,Erin,DiabAli,BillWilkerson,WalterD.Dawson,KunmiSobowale,CharlesReynoldsIII,MichaelBerk,HelenLavretsky,DilipJeste,CheeNg,JairC.Soares,GowriAragam,ZoeWainer,HusseiniK.Manji,JulioLicinio,AndrewW.Lo,EricStorch,ErnestineFu,MarionLeboyer,IoannisTarnanas,AgustinIbanez,FacundoManes,SarahCaddick,HowardFill