BioBonds Use Wall Street Tools to Fund Medical Research


In the development of disease treatments, the phase between basic research and advanced clinical trials is known as the “valley of death.”

While numerous public grants fund early-stage research, and pharmaceutical companies are willing to fund studies of proven solutions, funding “translational” research where key findings apply to potential treatments is notoriously difficult. As a result, some promising treatments are never pursued.

The pandemic has “made this perilous valley much deeper”, said Karen Petrou, co-founder and managing partner of Federal Financial Analytics, a financial services consulting firm in Washington that has created a new financial instrument designed to help solve this problem.

During the pandemic, clinical trials were halted, resources diverted from laboratories, attention focused on urgent needs, and most of the funding dried up. Starting new research projects was difficult.

At the same time, the value of funding scientific research became clearer: It would have been impossible for big pharmaceutical companies to accelerate vaccine development without the initial efforts of academic labs.

Ms. Petrou’s proposed solution, known as BioBonds, gained traction.

The program will create low-interest, government-backed loans for translation research. These will be packaged in a bond, similar to how mortgages are, and sold on the secondary market for risk-averse institutional investors such as pension funds.

In May, Illinois Democrat Representative Bobby Rush and Pennsylvania Republican Representative Brian Fitzpatrick passed legislation that, if passed, would create $30 billion in these loans over three years.

Diagnosed with retinal degeneration as a teenager and blind in her 40s, Ms. Petrou first encountered the “valley of death” in 2013. It has been raising funds for studies to accelerate retinal degeneration treatment, but potential investors said. him translation projects it was very speculative – they needed results that showed that a potential idea was working, preferably involving a large population that would trust the pills.

Refused to accept this as a final answer. Many countries support private sector funding for biomedical research, and each does it differently, Ms Petrou said: “We needed an American model.”

Ms. Petrou and her husband, Basil, had been advising Wall Street executives and regulators for decades. (He recently wrote a book monetary policy that drives inequality.) They thought a lot about mixed public-private markets during the mortgage finance crisis. Inspired by green bonds – publicly funded loans that have created a $750 billion private market in sustainability projects since 2007 – they began working on the idea that became BioBonds.

“It’s a lifeline,” said Attila Seyhan, director of translational oncology operations at Brown University and a former Pfizer scientist. He said his colleagues were similarly interested.

Unlike grants, researchers will have to repay BioBonds loans. Still, finding unconditional funding is “a constant struggle,” said Dr. “There is a huge disappointment about the lack of alternatives,” Seyhan said.

He believes university business units will be “creative” for BioBonds to work. “There will be losses,” he said. “But if the 1 percent succeeds, you pay the losses. That’s how drug development works.”

Many schools are already encouraging scientists to find money outside of grants to pursue their ideas. Scientists say they need to think like venture capitalists when designing clinical trials, keeping commercialization in mind so they can raise money from private companies to fund them.

Surgeon and researcher at the Johns Hopkins University School of Medicine, Dr. “Even if we do discover something now, there is an acknowledgment that universities need to help researchers transition to commercialization,” says Richard Burkhart. Currently, her work is funded by the National Institutes of Health, but she is currently working with the National Institutes of Health. Technology Ventures He is trying to commercialize his work in his team.

While grants are preferred, they are not plentiful. Dr. Burkhart believes BioBonds bonds can help scientists and institutions navigate the challenging field of transformation.

When Petrous first came up with the BioBond concept, they made a modest offer. pilot program targeting blindness research. The legislation was introduced at the 2018 session of the Assembly and again at a new session in 2019. Then everything changed. “Covid hit and US biomedicine shut down,” Ms Petrou recalled.

Meanwhile, the couple’s understanding of the need for further translational research has tragically improved. Mr. Petrou was diagnosed with pancreatic cancer in 2018. Dr. Mr Petrou was believed to be cancer-free after undergoing surgery in 2019 as part of a clinical trial led by Burkhart. But a routine scan in April of last year revealed a resurgence of the disease.

Petrus was determined to find another case, but thousands were stopped due to the pandemic. Locked in the house, they decided to reconsider the BioBonds idea but to think bigger. They redesigned their initial proposal, expanding it to address the additional stress on the already fraught translation space.

“Once we started hearing about the devastation in the clinical research context, I was quickly able to change direction,” said Valerie White, a recently retired financial services lobbyist who was formerly at Akin Gump. He had helped shepherd the original bond concept and immediately started talking to people in Congress about BioBonds.

The law, passed by Mr Rush and Mr Fitzpatrick in May, dubbed “Long-Term Opportunities to Advance New Studies for Biomedical Research,” or Biomedical Research LOANSwill require the secretary of health and human services to guarantee $10 billion a year for three years to provide loans to universities and other laboratories to run FDA-approved clinical trials. The bill has 14 co-sponsors and support from nearly 20 organizations, including the Alliance for Aging Research, the Alzheimer’s Drug Discovery Association, the Blind Veterans Association, and the Children’s Diabetes Research Foundation.

“This should obviously get the attention of many different sectors in Congress,” Ms White said. From his perspective, further biomedical research will not only save lives, but will lead to increased military readiness and economic viability, among other things.

He voluntarily participated in the project for four years and said he would continue until the BioBonds bill became law.

If that day comes, Mr. Petrou will not be there to celebrate. He died in March. Ms. Petrou believes that the surgery she underwent as part of the clinical trial would have saved her life had it not been for further complications.

Ms. Petrou is determined to see the LOANS Act pass and pay tribute to her partner for more than a quarter of a century. He thinks a lot about all the suffering people are experiencing now, the suffering that could have been avoided in the future if more studies were done on all kinds of cures, including cancer and blindness.

“This was their baby,” said Ms. White, who was present at the couple’s wedding and remained friends with them over the years. “It’s almost ironic that this whole project started with blindfolds that could have helped Karen, but in the end, it was Basil who could have benefited from this if the idea had existed before.”


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