Episode 8: Andrew Lo on fixing business models in biotech and a sparkling Mio sake!

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https://bit.ly/3YxRltJ. Andrew Lo, Charles E. & Susan T. Harris Professor of Finance and director of the Laboratory for Financial Engineering at the MIT Sloan School of Management, gives JC and Andy the skinny on his progress in finding new commercialization models for rare diseases. He also reveals plans on implementing his debt securitization megafund model, first described over a decade ago. Finally, he gives us some tips on how to prepare a delicious refreshing sparkling sake:
1) Mio sparkling sake
1 bottle Mio sake
1 freezer
DIRECTIONS:
From Andrew: "Store bottle of Mio at 58ºF (the recommended temperature of typical wine cellar). Move bottle to the freezer section of your refrigerator for about two hours before you're ready to consume it. The time is approximate, and depends on how cold your freezer is, so you may need to play around with this key parameter. After two hours, remove the bottle from the freezer; it should still be completely liquid inside (if it's partially frozen, you've kept it in too long and need to thaw it before opening).

Assuming that the sake is completely liquid, twist open the bottle and QUICKLY POUR OUT A SERVING INTO YOUR GLASS. The reason you have to pour quickly is that the sake is sparkling, which means the carbonation creates pressure in the bottle. Once this pressure is released, the liquid starts to foam and the foam will freeze, clogging the bottle and making it impossible to pour out any liquid. By pouring it quickly, the foam forms in the class, yielding the desired frozen treat. The remaining liquid in the bottle is blocked by the frozen foam in the neck, but this will melt while you enjoy the first pour, and should be ready to be poured out in just a few minutes (though the foam won't be quite as thick in the second glass).

This works best with Mio's individual 375ml bottles. It can be done with full 750ml bottles but it's hard to pour multiple glasses fast enough before the foam freezes in the neck (you have to line up your glasses and pour quickly in a straight line)."

Sources mentioned in the podcast:
Andrews new book:
Andrew W Lo and Shomesh E Chaudhuri. Healthcare Finance (Princeton University Press, Princeton, 2023)
Original paper describing megafund/securitization:
Fernandez, JM et al. Commercializing biomedical research through securitization techniques. Nat Biotechnol 30, 964–975 (2012). https://doi.org/10.1038/nbt.2374
Paper describing methodology for assessing risk (likelihood of approval) of biomedical assets:
Siah, KW et al. Predicting drug approvals: The Novartis data science and artificial intelligence challenge. Patterns 2, 100312 (August 13, 2021).

EU approval of Agilis Biotherapeutics/PTC’s Upstaza AAV2 gene therapy for delivering dopa decarboxylase to patients with aromatic L-amino acid decarboxylase (AADC) deficiency. As AAAC deficiency has an incidence of about 1 per 1,000,000 live newborns (332 potential US patients every year), a billion dollar return could theoretically be obtained in three years...in practice though the challenge for PTC is to find those patients!

The Mixer music “Pour Me Another” courtesy of Smooth Moves!

Chapter

1. Episode 8: Andrew Lo on fixing business models in biotech and a sparkling Mio sake! (00:00:00)

2. Financing ideas out of academia (00:02:13)

3. The early-stage landscape for biotech (00:07:58)

4. New models for rare diseases (00:13:00)

5. Priority review vouchers (00:15:03)

6. Funding ultrarare diseases (00:23:22)

7. The future of securitization and megafunds (00:27:14)

8. How to rate the risk of biomedical assets? (00:34:49)

9. Who would invest in biomedical bonds? (00:40:17)

10. The future of biofinance (00:43:43)

11. A sake and a daiquiri in one (00:45:40)