A Proposal from FasterCures by Melissa Stevens (Milken Institute Review) – In the past few years, the media has showered us with headlines about recordsetting biotech financing – outsized venture-capital rounds, unprecedented public market appetite for IPOs, and robust sector returns. But a closer look suggests there is more froth than substance at this frontier of medicine and science.
Even with substantial investment inflows, capital constraints continue to hamstring our ability to advance all of the truly novel and potentially life-changing treatments that technology is making possible. There are 10,000 known diseases, yet there are viable treatments and cures for only about 500 of them. Certainly money alone won’t bridge the innovation chasm. But more capital, and more of it directed to early-stage research, would do much to increase medical R&D productivity
those devilish details Life-science venture funds are clearly raising money – and lots of it. In 2015, the mainstays of the sector, among them Flagship Ventures, Atlas Ventures and MPM Capital, took in more than a quarter-billion dollars each. But an analysis of venture data by the journal Health Affairs shows that the sector is becoming more conservative, moving away from funding companies with technologies in earlier stages of development toward those with technologies in later stages. In 2009, the earlylate distribution was 62 percent and 38 percent, respectively. Five years later, only 45 percent of funding was being allocated to early-stage companies. Why the shift? It all comes down to risk – scientific risk, regulatory risk, reimbursement risk. Only 1 in every 10,000 discoveries made at an academic research bench ever ends up in the hands of patients.
Melissa Stevens is the executive director of the Milken Institute’s Center for Strategic Philanthropy