A Portfolio Approach to Accelerate Therapeutic Innovation in Ovarian Cancer

17 Pages Posted: 11 Dec 2018

See all articles by Shomesh Chaudhuri

Shomesh Chaudhuri

Massachusetts Institute of Technology

Katherine Cheng

Harvard Business School

Andrew W. Lo

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER); Massachusetts Institute of Technology (MIT) - Computer Science and Artificial Intelligence Laboratory (CSAIL)

Shirley Pepke

Lyrid LLC

Sergio Rinaudo

MIT Sloan School of Management

Lynda` Roman

University of Southern California - Division of Gynecologic Oncology

Ryan Spencer

University of Wisconsin - Madison - School of Medicine and Public Health

Date Written: October 25, 2018

Abstract

Biomedical innovation in oncology has become riskier and more expensive, precipitating a withdrawal of private sector funding from the sector. In this article, we consider a portfolio-based approach to funding in which multiple distinct ovarian cancer treatment candidates are funded within a single structure. Twenty-five potential early-stage drug development projects were identified for inclusion in a hypothetical portfolio through interviews with gynecological oncologists and leading experts, a review of ovarian cancer-related trials registered in the ClinicalTrials.gov database, and an extensive literature review. The annualized returns of this portfolio were simulated under a purely private sector structure both with and without partial funding from philanthropic grants, and a public-private partnership that included government guarantees. We find that public-private structures of this type can increase expected returns and reduce tail risk, allowing greater amounts of private sector capital to fund early-stage research and development.

Keywords: biotech; venture capital; healthcare finance; investments

JEL Classification: G11; G12; G24

Suggested Citation

Chaudhuri, Shomesh and Cheng, Katherine and Lo, Andrew W. and Pepke, Shirley and Rinaudo, Sergio and Roman, Lynda` and Spencer, Ryan, A Portfolio Approach to Accelerate Therapeutic Innovation in Ovarian Cancer (October 25, 2018). Available at SSRN: https://ssrn.com/abstract=3286330 or http://dx.doi.org/10.2139/ssrn.3286330

Shomesh Chaudhuri

Massachusetts Institute of Technology ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Katherine Cheng

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Andrew W. Lo (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-618
Cambridge, MA 02142
United States
617-253-0920 (Phone)
781 891-9783 (Fax)

HOME PAGE: http://web.mit.edu/alo/www

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Massachusetts Institute of Technology (MIT) - Computer Science and Artificial Intelligence Laboratory (CSAIL)

Stata Center
Cambridge, MA 02142
United States

Shirley Pepke

Lyrid LLC ( email )

South Pasadena, CA
United States

Sergio Rinaudo

MIT Sloan School of Management ( email )

100 Main Street
Cambridge, MA 02142
United States

Lynda` Roman

University of Southern California - Division of Gynecologic Oncology ( email )

CA
United States

Ryan Spencer

University of Wisconsin - Madison - School of Medicine and Public Health ( email )

Madison, WI 53711
United States

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