Any investor knows that a balanced portfolio offers protection against the inherent risk of the marketplace. Could the same be true for Alzheimer's drug discovery? In a commentary in this week's Science Translational Medicine, Andrew Lo of the Massachusetts Institute of Technology in Cambridge and colleagues argue for a new rationale. They claim that a "portfolio approach" has a better chance of success than the current method, in which competing sponsors advance individual projects separately from each other. The portfolio approach would entail supporting many drug-discovery ventures simultaneously from a coordinated funding platform. By Lo's reckoning, this would cost more than $38 billion for 64 parallel projects. Lo proposes a "megafund" for this endeavor, supported mostly by the public sector. He told Alzforum that over the long term, savings to the $150 billion a year Medicare and Medicaid costs for dementia care would help defray the expense. "If you amortize the $38.4 billion over a 30-year term, the expected rate of return would be about 16 percent, per year," said Lo. "That sounds like a terrific investment from the taxpayer's perspective."
"Dr. Lo is spot-on about the urgency of the dementia health crisis … the value of parallel discovery, and the opportunities for public-private partnerships," Ian Kremer, executive director of Leaders Engaged on Alzheimer's Disease, wrote to Alzforum (see full comment below). Industry leaders contacted by Alzforum agreed that this approach was worth taking. Industry has already begun a concerted effort to integrate resources and research, for example within the EPOC-AD initiative (see Dec 2013 conference news) to pool resources to integrate their drug discovery, or DIAN, which tests drugs from two sponsors in the same trial (see Oct 2012 news story). This new proposal outlines a financial business model to enable such collaborations further.
Lo, an economist, got the idea partly from studying the securities industry. In 2003, $3 trillion was invested in mortgages, for example. He wondered why similar securities could not be used for drug development. "I thought people had tried this approach and it did not work, but the more I looked into it, the more I realized industry had not tried it," he told Alzforum.
Applied to cancer, the megafund approach would readily draw private investors, Lo argues, because the anticipated rate of return is high. In the last two and a half years the FDA approved 33 new drugs for cancer, three for breast cancer alone in the last year. Because the track record for dementia is dismal in comparison, its megafund would fail to attract private investment. Over a 13-year development period—a typical time scale for a new drug—the rate of return would be minus 14 percent. Pick a longer horizon, however, and the outlook turns rosy. Lo and colleagues calculated that by 30 years, slowing the rate of progression of AD would yield expected returns of investment of almost 11 percent. The 16 percent figure comes from assumptions of delaying onset by five years.
Getting government to invest over the longer term for a better rate of return might be easier said than done, though Kremer noted that the climate may be changing for the better. The National Plan to Address Alzheimer's Disease, FDA and NIH initiatives, and new public and private partnerships are all steps in the right direction. "The relatively small and heroic cadre of government and private-sector visionaries and risk-takers upon whom dementia advocates have relied for decades may be soon joined by a wave of new allies more willing and more committed than ever before to bringing game-changing innovation to dementia science, care, and support," wrote Kremer.—Tom Fagan
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