Chaudhuri, Shomesh E., Katherine Cheng, Andrew W. Lo, Shirley Pepke, Sergio Rinaudo, Lynda Roman, and Ryan Spencer, 2019, Journal of Investment Management 17(2), 5–16.
ABSTRACT We consider a portfolio-based approach to financing ovarian cancer therapeutics in which multiple candidates are funded within a single structure. Twenty-five potential early-stage drug development projects were identified for inclusion in a hypothetical portfolio through interviews with gynecological oncologists and leading experts, a review of ovarian cancer-related trials registered in the ClinicalTrials.gov database, and an extensive literature review. The annualized returns of this portfolio were simulated under a purely private sector structure both with and without partial funding from philanthropic grants, and a public-private partnership that included government guarantees. We find that public-private structures of this type can increase expected returns and reduce tail risk, allowing greater amounts of private sector capital to fund early-stage research and development.
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