Can Financial Engineering Cure Cancer?: New Approaches to Funding Biomedical Innovation
Funding for biomedical innovation has been declining at the same time that scientific breakthroughs in translational medicine seem to be occurring at ever increasing rates. One explanation for this counterintuitive state of affairs is that greater scientific knowledge in biomedicine can actually lead to greater economic risk for biopharma investors. While the impact of the Human Genome project, high-throughput screening, and genetic biomarkers has been tremendously positive for clinicians and their patients, it has also increased the cost and complexity of the drug development process, causing investors to shift their assets to more attractive investment opportunities. In this talk, Prof. Lo will review this novel interpretation of recent trends in the biopharma industry and describe how financial engineering----portfolio theory, securitization, credit default swaps, and other tools of modern finance---can be used to reduce the risk and increase the attractiveness of biomedical innovation so as to bridge the "Valley of Death" in translational medicine.
Finance Seminars at Caltech are funded through the generous support of the Linde Institute and Stephen A. Ross.