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How can this idea be brought to reality?

The end of the talk left me feeling like so much work has been done to bring the right people together to get this concept off the ground and demonstrate that it could work. Why doesn't Mr. Stein want to start this fund? Who does he think should do it? Who do we think should get this going?

Topics: cancer finance
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    Jan 12 2014: I am an MD and worked in Drug Development in Pharma Industry for some years. Mr. Stein ideas seem interesting, but he seems to have skipped a very important part: the pre-clinical (phase I is already clinical). Who is going to pay for this? It's not as expensive as the clinical development, but there is a substantial investment anyway.

    The cost to develop a new drug is around 800 000 million u$ to 1 billion u$ (from bench to market); it is calculated that one in around 10 000 compounds make it to the market.

    Pharma companies have many employees, highly specialized and experienced to do each part of the laborious and complex work and they aim to have substantial profits from the heavy investments. They offer the possibility to everyone to buy shares from them - how M. Stein proposal differs from that? Who will decide which compounds will be developed (remember that same fail in phase II, after a LOT of money was invested)?And how will they be commercialized after approval is obtained from Health Authorities, to guarantee a return of the investment? After approval, here in EU, it's necessary to obtain the right price, and this is quite a complex matter.

    It would be wonderful to see substantial investment for development of many valuable compounds, including much needed new antibiotics and vaccines. Could US Government invest in drug research (including the initial steps, when most compounds are discarded) and start this process so Mr. Stein's proposal could take off?
    • Jan 13 2014: Denise, he didn't skip the pre-clinical phase -- it's included in the flowchart he shows (and inferred by the 20 years' worth of potential drugs sitting on the shelf for lack of funding? That's over my pay grade...).

      As for your question "Who is going to pay for this?", I suggest you're still thinking of the problem from a medical standpoint -- perfectly reasonable. What he is suggesting is to "bundle" scores or 100s of potential drugs, much like mutual funds bundle stocks and bonds to spread out the risk and make the whole more appealing to investors than any individual component. If you have a 401k or pension plan, you undoubtedly literally "buy in" to this model...

      Be well.
    • Jan 22 2014: Denise, buying shares in a Pharma company does not provide the company any extra capital in the secondary market.

      A company raises capital from shares only on its Initial Public Offering, by selling part of the company to investors, each share representing a tiny slice of the company, or more accurately, a share of the profits (the dividend).

      The number of issued shares x initial value = the capital raised for the company to spend how it wants, in ways that its new shareholders will best benefit. It's important to note that when a company floats, it serves the shareholders. This may be the reason that the Pharmas are not choosing to develop these shelved compounds; management are at the mercy of money-men who may not share the same ideals or motives as the original founders.

      When you buy a share on the secondary market, i.e. not at IPO, you are buying from another shareholder. In the same way, buying a second hand car does not make any money for the original manufacturer.

      The company can issue more shares to raise more money in what's called a Rights Issue, but various dilution issues make this unattractive. Bonds are often issued by companies to raise capital from the public/financial markets and are a form of borrowing with interest. A company may do this to fund a particular project.

      Roger, if I understand correctly, is proposing a vehicle that buys the drugs from the Pharma company and develops them, paying interest along the way by selling some of the drugs that have passed some testing stages and have less risk and a higher value, presumably back to Pharma companies*. In a sense, it is a small Pharma company with the soul remit to work on compounds that are not being touched while being disencumbered from boosting its share price and future prospects, to the contrary, it has an 'end date' allowing it to focus on a single mission.

      *I guess there's a market for such assets, much like prospecting land and reselling it.

      Luke
  • Jan 19 2014: Mr. Stein has another good idea which is what occurs naturally in a capitalist, democratic republic. He is not the first (credit default swaps, mortgage backed security's). Unfortunately this novel idea will never work when our elected officials have full time employment and can dictate laws along with unchecked presidential powers and official agencies that bear no responsibility for their actions.
  • Jan 13 2014: I think it would be best to have the fund/portfolio and the research and development two completely separate entities; i.e. raise capital in the way Stein described BUT, utilize the capital to purchase slices/percentages of drugs that are ALREADY being developed at corporations/companies around the globe but are within their very early stages. In this way, the fund would still accomplish its goal of providing positive returns to investors while increasing the amount of breakthrough drugs. This is by NO means easy, however I could see this as being a viable way of getting this idea off the ground. The very difficult part is putting together a very proficient management team who can properly diversify the portfolio in a way such that the risk is well distributed, and returns based on that risk, are reasonable and consistent.
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      Jan 16 2014: Interesting, but as I have understood, many companies focus most of their R&D money now on new uses for already approved drugs. This is safer, financially. I think the point of Stein's presentation was to get funding for the compounds that are not being tested at all. I love the idea.
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    Jan 12 2014: Jennifer, I am way out of my league here .. but ... if the companies thought that any of the drugs would bring a profit return they would not be on the shelf. I am sure there are many reasons to shelf projects among them lawsuits, costs exceeding return expectations, ineffectiveness, no chance of FDA approval, and someone beat them to it.

    The bottom line is money. I am not cheap but I like to get my monies worth. I look at the active ingredients ... if they have the same active ingredients and one is $10 and the other $3 ... why should I give away $7. Look at the shelves and see hundreds of products that all promise you miracle relief .... really!!!! We spend billions a year on what smart eating, exercise, and a annual doctors visit would resolve.

    More drugs are not the answer .... smarter living is a good beginning. Always consult a doctor / health professional.

    Just one guys opinion. Be well. Bob.
  • Jan 12 2014: Stupid question but I think it is coordinating the potentials, scientific management.

    For uncommercial diseases research I wrote a modal what free money for wise and only pragmatic requests to try a certain orietatiom to find a cure. To brainstorm fot how to handle a disease (sort). The succesfull cures may not be capitalistic. Cures at lowest prices. I also found back than when I published it on my blog there seemed enough money-irrelevant. But its sitting there on my blog amongst 100 other solutions to other problems. If you like to know my blog link please contact me please, as links to promote are not allowed. :()
  • Jan 11 2014: It appears tHat Stein has already done the work to get his plan under way.. In the event he has trouble creating a pathway to the plans further development how about financial marketing people? He is certainly on to something.
    God bless and good luck. William J Ryan
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    Jan 11 2014: The idea that "if we just get trillions of dollars, it could all work out" isn't that appealing to the masses.

    This would have to be a team effort from some major players in the money business.