Can Wall Street help cure cancer?
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Earlier this week, some of America’s top cancer doctors convened in Boston for some intensive brainstorming about future research into the disease. No surprise there, you might think: medical researchers hold numerous conferences each year, and the city has many brilliant doctors.
But this particular gathering, organised by the MIT Sloan School of Management and known as CanceRX, featured a novel twist: next to the oncologists, there were renowned economists such as Andrew Lo (a leading behavioural finance professor) and Robert Merton (the Nobel Prize-winning economist who helped devise the (in)famous Black Scholes model of option pricing). More unusual still, there were bankers and financiers too.
The reason? These days, academics such as Lo are in deep dismay about the lack of progress in beating cancer. For though there have been numerous exciting medical breakthroughs in recent years, he argues that these have not been turning into effective treatments at an equally impressive rate because companies (and shareholders) are unwilling to fund speculative long-term research.
Thus Lo, who lost his own mother to cancer two years ago, wants to attract more funding into the sector by borrowing techniques that bankers have developed in an entirely unrelated corner of finance. Most notably, he hopes to import the idea of “collateralised debt obligations” to enable investors to share the risks and rewards of investing in medicine. “The bench-to-bedside process of translating biomedical research into effective therapeutics is broken,” he recently wrote with a team of colleagues in the scientific press, arguing that by “employing financial engineering techniques such as securitisation”, research funds could be unlocked – and investors get returns of around 10 per cent.
Is the idea mad? My first instinct was to say “yes”. After all, CDOs were central to some of the recent financial dramas, and the phrase “financial engineering” has become badly tarnished as a result. Nevertheless, as my colleagues John Authers and John Gapper have pointed out recently, medicine desperately needs more research dollars, particularly given that government budgets are being cut. So notwithstanding my reservations, Lo’s idea is worth exploring – not least for its creative thought.
And there was a second reason to celebrate this week’s gathering: it pulled together different academic tribes. This is noteworthy because it seems to be something of a growing – laudable – trend in the medical research world. During most of the postwar years there has been a strong tendency for medical scientists and doctors to only conduct research along narrow, specialist lines within a preset academic structure. That was partly because the dominant models of funding and career advancement usually penalised anyone who stepped – or thought – outside the normal box. But another issue was that doctors, bankers, scientists and economists tended to inhabit different spaces.
But one of the beauties of Boston is that there are so many academics in such a small geographical space that it is relatively easy for different people and ideas to collide – hence the appearance of CanceRX. Better still, such boundary-hopping brainstorming is not just happening in small university towns but in other places too. Over in Long Island, for example, the Cold Spring Harbor Laboratory has started hosting meetings between financiers, academics and scientists to develop novel approaches to medicine. Similar initiatives are under way on the west coast of America. Meanwhile, inside the world of medical research, it is becoming so trendy for institutions to break down specialist silos that there is a host of new boundary-hopping terms (think of biophysics, bioengineering, neuroscience and so on).
Some of this is occurring at long-established medical centres such as the Cleveland Clinic and Mayo Clinic. But there are intriguing new ventures too. Just last week, for example, Adam Glick, a New York financier and philanthropist, announced the launch of a new foundation with the wonderfully catchy name “Blue Guitar”. “There are a number of things that have frustrated me about how a lot of research is done in America,” explains Glick. “Most research is handcuffed to one institution … [is] not actionable … and for structural reasons it is very difficult to do any research that falls at the nexus of two fields, particularly biology and social science.” So Blue Guitar will fund the type of boundary-hopping research that straddles medicine and psychology, by looking at when and why placebos are effective in therapy.
Now, it remains to be seen whether any of these initiatives will actually bear fruit. And it should be stressed that for every doctor – or banker and economist – who is now trying to think outside the box, many more are still stuck in their comforting specialist worlds. But at a time when there is reason to feel gloomy about the state of healthcare – and finance – it is nice to cheer some creative thought; and doubly so in a world where current trends suggest that almost half of us will end up grappling with cancer at some point in our own lives.
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