Models for Biomedical Innvation and Commercialization

Biomedical researchers in labs around the world are discovering potential treatments and cures, and publishing and presenting their findings, but increasingly, these breakthroughs don’t reach doctors and their patients. Too many ideas and discoveries with the promise of helping millions of patients stall in the drug development pipeline, trapped in the “valleys of death,” the funding gaps between the validation of a lab discovery through early testing and the final stages of large clinical trials. This is the point at which pharmaceutical firms abandon potentially revolutionary therapies because the costs for funding human trials are too high, their business models favor blockbuster drugs rather than lower profit margins, shareholder and investor pressure is too great, and profitability is too far off on the horizon. For the past decade, traditional funding mechanisms have yielded few cures for patients or acceptable risk-return investment profiles. This is especially true in Israel, where promising biomedical IP and startups tend to move abroad because local funding dries up.
One of the Lab’s chief goals was to find ways to bridge the gaps in research, finance, and business models in order to accelerate drug development and make it attractive to investors and large pharmaceuticals again. How, for example, can the tools of financial technology facilitate closer collaborations between pharmaceutical companies, capital markets, governments, and, in some cases, medical philanthropies? How can this work in Israel?
There are numerous examples of firms, cities, states, and national governments pursuing biomedical financing options. Back in 2004, voters in California approved a $3 billion bond initiative to fund the California Institute for Regenerative Medicine’s stem cell research. Its successes and failures can provide valuable lessons. In 2014, the European Commission and the European Investment Bank jointly launched InnovFin, a facility offering financing tools that include loans, loan guarantees, and equity funding through banks or funds. The expectation was to attract some €24 billion of public-private finance over the five-year life of the program; as of 2018, 13 percent of funding targets the life sciences, medical technology, pharma, and health care R&D. In 2015, London’s then mayor, proposed a US$15.7 billion bio-pharma development mega-fund to support UK biotech firm and drug development, and keep it from leaving the country. In 2016, Swiss investment bank UBS AG announced it had raised US$470 million to launch a fund for cancer research. In 2017, BridgeBio, a US biopharmaceutical firm, raised $13.5 million in financing for its portfolio of early-stage drug development programs held by subsidiary companies. With such precedents in mind, Lab participants set out to design workable options for Israel.

Glenn Yago
Glenn Yago
Glenn Yago is the Senior Director of the Milken Innovation Center at the Jerusalem Institute for Policy Research and a Senior Fellow / Founder,Financial Innovations Labs® (Milken Institute-U.S). He is a leading authority on financial innovations, capital markets, emerging markets and environmental...
Steven Zecher
Steven Zecher
Steven Zecher is the project director the Milken Innovation Center at the Jerusalem Institute for Israel Studies. His work focuses on financing strategies with an emphasis on public-private-philanthropic capital structures. Zecher has extensive experience in urban and regional development policy,...
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