Financing drug discovery for orphan diseases
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orphan_rev_final.pdf
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233.97 KB
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Author(s)
Gromatzky, Austin A.
Stein, Roger Mark
Fernandez, Jose-Maria
Fagnan, David E.
Lo, Andrew W
Date Issued
May 2014
Journal
Drug Discovery Today
Publisher
Elsevier B.V.
Citation
Fagnan, David E., Austin A. Gromatzky, Roger M. Stein, Jose-Maria Fernandez, and Andrew W. Lo. “Financing Drug Discovery for Orphan Diseases.” Drug Discovery Today 19, no. 5 (May 2014): 533–538.
Version
Author's final manuscript
Abstract
Recently proposed ‘megafund’ financing methods for funding translational medicine and drug development require billions of dollars in capital per megafund to de-risk the drug discovery process enough to issue long-term bonds. Here, we demonstrate that the same financing methods can be applied to orphan drug development but, because of the unique nature of orphan diseases and therapeutics (lower development costs, faster FDA approval times, lower failure rates and lower correlation of failures among disease targets) the amount of capital needed to de-risk such portfolios is much lower in this field. Numerical simulations suggest that an orphan disease megafund of only US$575 million can yield double-digit expected rates of return with only 10–20 projects in the portfolio.
MIT Department
Massachusetts Institute of Technology. Computer Science and Artificial Intelligence Laboratory
Massachusetts Institute of Technology. Department of Biology
Massachusetts Institute of Technology. Operations Research Center
Sloan School of Management
Sloan School of Management. Laboratory for Financial Engineering
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Creative Commons Attribution-Noncommercial-Share Alike
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DOI of Published Version
https://doi.org/10.1016/j.drudis.2013.11.009
