Fascinating piece just published in
Nature Biotechnology by our MIT colleagues Jose-Maria Fernandez, Roger Stein and Andrew Lo on
Commercializing biomedical research through securitization techniques. They propose RIBOs -- Research & Innovation Backed Obligations -- or R&D megafunds...
"...a financial structure in which a large number of biomedical programs at various stages of development are funded by a single entity to substantially reduce the portfolio’s risk. The portfolio entity can finance its activities by issuing debt, a critical advantage because a much larger pool of capital is available for investment in debt versus equity. By employing financial engineering techniques such as securitization, it can raise even greater amounts of more-patient capital."
To exemplify this, they propose a cancer megafund. Read the paper for more details, but these illustrate flows...
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