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Financial Innovations for Accelerating Medical Solutions

Oct 01, 2006



In the fall of 2005, the Milken Institute held two Financial Innovations Labs, in Santa Monica, Calif., and New York City, to address the crisis of diminished funding for biomedical research and development, and to explore new channels for attracting capital to drug development.

This report is a summation of those discussions, and the resulting recommendations that could help increase funding and accelerate the finding of cures for those with life-threatening illnesses.

The report offers an overview of the issue: Despite the enormous potential of biomedical research to cure disease, public and private funding has declined - a trend that could jeopardize efforts to find improved treatments for people with life-threatening illnesses.

And it offers six innovation solutions to help solve the problem:

  • Reduce the scientific risk through diversification (pooling) of intellectual capital.
  • Use foundation funds to enhance credit quality and attract potential investors.
  • Use directors and officers (D&O) liability insurance to enhance credit quality.
  • Tap into the emerging market for intellectual property-backed securities.
  • Use advanced purchases to underwrite medical research and drug delivery to under-funded patient groups.
  • Use donor bonds to underwrite medical research and drug delivery to under-funded patient groups.

The Labs, hosted by the Milken Institute, included members of foundations, patent brokers, intellectual property lawyers, private-equity investors and analysts, insurance consultants, valuation and strategy consultants, biotech entrepreneurs, pharmaceutical representatives and academics.

These key stakeholders explored new channels for attracting capital to drug development, and identified market vehicles that could reduce risk, attract investors and accelerate commercialization in a broad range of diseases.

In the current financial environment, good ideas with the potential to cure disease are nearly impossible to find, the report notes. The biotech industry is undergoing a painful shakeup that could impede, if not derail, the advancement of treatments and cures.

The Labs and report were supported, in part, by Inflect Technologies and its founder, Lee Cole.