Financing the ;;Valley of Death;; : an evaluation of incentive schemes for global health businesses

[摘要] (cont.) To date venture capital has not yet flowed in a meaningful way into startup companies focusing on neglected diseases. This is partially attributable to uncertainties surrounding the credibility and value of the incentives, but it also raises the question of whether these incentives will be sufficient to attract venture investment to a small biotech company focused on neglected diseases. The objective of this thesis is to explore the potential impact of these market design mechanisms on the financial prospects of early stage, pre-revenue biotech companies focused on neglected diseases, including an evaluation of whether the incentives will be sufficient to attract venture investment to the company. To accomplish this, a simulation model was created to compare the relative impacts of these incentive schemes on a small biotech company focused exclusively on a neglected disease therapeutic. The simulation data presented herein reflect the inherent tensions between the social benefit of a neglected disease therapeutic and the need for investors to pursue a financial return commensurate with the risk of the investment. I conclude that, while market design mechanisms like PRVs and AMCs are an intriguing first step, a dual market strategy is likely still necessary for a neglected disease company to attract private investment.

[发布机构] Massachusetts Institute of Technology