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News Link • Drugs and Medications

Economist Proposes a $30 Billion Megafund for New Cancer Drugs

• Jessica Leber via

Hedge fund manager and prominent economist Andrew Lo is recognized for developing theories about how markets function and why they failed during the financial crisis. Now Lo, who is also the director of the MIT Sloan School of Management’s Laboratory for Financial Engineering, thinks he can also help create a better market for investing in promising treatments for cancer.

His proposal is to structure a new kind of financial tool, a “megafund,” for funneling up to $30 billion into the discovery of cancer drugs. The project would be unprecedented in scale at a time when the biomedical sector is searching for fresh funding ideas. As Lo says, the community is “ripe for something new.”

In a paper published in Nature Biotechnology earlier this fall, Lo and his coauthors note that large pharmaceutical companies are no longer nurturing early-stage drug development. Venture capitalists, too, are deserting life science startups, which averaged them negative 1 percent returns over the last decade. The result is a growing funding gap between basic lab research and commercial drug development. And fewer drugs are surviving the costly gauntlet of clinical trials to eventually reach FDA approval.

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