How better financing could help create new cancer drugs
The pharmaceuticals industry presents a quandary for potential investors: Major investments in drug development pay off handsomely in a relatively small number of cases, but many other projects deliver no returns at all. The evident difficulty of picking winners can deter investors from putting money into individual companies.But a novel way of financing the industry could help bring infusions of money into the drug-development pipelines of many firms, as scholars from the MIT Sloan School of Management outline in a paper appearing this week in Nature Biotechnology. The authors suggest that a large “megafund,” consisting in large part of long-term bonds issued by drug companies, would help fund languishing projects while providing a safer investment option for large institutional investors and money managers. “This kind of financing vehicle could actually be a great mechanism to spur the industry to fill those pipelines,” says co-author Andrew Lo, the Charles E. and...