Financing innovation: proposal for novel adaptive platform trial fund offers new model for ALS drug development

(Press-News.org) A team of researchers from the MIT Sloan School of Management, the Sean M. Healey & AMG Center for ALS at Massachusetts General Hospital (MGH), Questrom School of Business at Boston University, and QLS Advisors have introduced a new approach to funding clinical trials for amyotrophic lateral sclerosis (ALS) therapies. The study “Financing Drug Development via Adaptive Platform Trials,” published today in PLOS One, outlines a financing model that merges the efficiencies of adaptive platform trials — lower costs and shorter durations — with an innovative royalty-based investment structure designed to accelerate therapeutic development for ALS and other serious diseases.

ALS — also often called Lou Gehrig’s disease — is a progressive, neurodegenerative disease with no cure. Despite its devastating impact, the pace of new therapy development has remained sluggish — largely due to the high cost, duration, and risks associated with traditional clinical trials. This bottleneck has often discouraged conventional investors, leaving promising research to languish.

To tackle this challenge, the authors propose an investment fund that finances half the cost of an adaptive platform trial in exchange for future royalties from successful drugs that emerge from the trial. Adaptive platform trials allow multiple drug candidates to be tested simultaneously under a single master protocol and results are interpreted on a real-time basis to determine efficacy or futility. Drawing on data from the HEALEY ALS Platform Trial administered by the Healey & AMG Center for ALS and realistic assumptions, their simulated fund generated an expected return of 28%, with a 22% probability of total loss, which may be attractive to more risk-tolerant and impact-driven investors such as hedge funds, sovereign wealth funds, family offices, and philanthropists. Their findings suggest that generating returns more palatable for mainstream investors could be achieved by funding multiple platform trials simultaneously and by employing financial tools such as securitization—a method that bundles future income from assets like loans or royalties into investment products.

The study represents a multidisciplinary collaboration among physicians, clinical trial experts, and  financial engineers including Annette De Mattos, Kristin Drake, Merit E. Cudkowicz, Ricardo Ortiz, Meredith Hasenoehrl, Marianne Chase, Brittney Harkey, and Sabrina Paganoni of the Sean M. Healey & AMG Center for ALS at MGH; Eugene Sorets of Questrom School of Business at Boston University; Shomesh Chaudhuri and John Frishkopf of QLS Advisors; and Joonhyuk Cho and Andrew W. Lo of MIT. Their work bridges the gap between biomedicine and capital markets, laying a new path forward for how lifesaving therapies are financed and delivered.

“ALS clinical trials face significant hurdles—from high costs and long timelines to limited funding pools,” said Dr. Cudkowicz, Executive Director Mass General Brigham Neuroscience Institute and Director of the Healey & AMG Center for ALS. “Our platform trial model has already shown that we can test more therapies more efficiently. What’s still missing is sustainable financing. This novel approach could be a game-changer, enabling us to launch trials faster, include more promising therapies, and bring us closer to our shared goal: delivering effective treatments to people with ALS as quickly as possible.”

Dubbed a “Fund of Adaptive Royalties” (FAR), this model is uniquely positioned to transform how diseases like ALS are addressed, providing developers with access to shared infrastructure, centralized data analytics, and significantly reduced upfront capital requirements while offering investors a diversified, portfolio-based exposure to multiple drug candidates and the potential for high returns. While their study focused on ALS, the authors believe such a funding model could be applied to other disease areas as well, especially those with well-defined endpoints, where treatment success can be measured clearly and reliably, and few existing therapies.

“This financing framework addresses one of the core issues in biomedical innovation—bridging the valley of death between discovery and delivery,” said co-author Lo, MIT Charles E. and Susan T. Harris Professor and director of MIT Sloan’s Laboratory for Financial Engineering. “By aligning incentives between investors and developers and distributing risk across a portfolio of candidates, we can unlock new sources of capital for diseases that urgently need them.”

 

 

About MIT Sloan School of Management

The MIT Sloan School of Management is where smart, independent leaders come together to solve problems, create new organizations, and improve the world. Learn more at mitsloan.mit.edu.

 

About the Sean M. Healey & AMG Center for ALS at Mass General

At the Sean M. Healey & AMG Center for ALS at Massachusetts General Hospital, we are committed to bringing together a global network of scientists, physicians, nurses, foundations, federal agencies, and people living with ALS, their loved ones, and caregivers to accelerate the pace of ALS therapy discovery and development.

Launched in November 2018, the Healey & AMG Center, under the leadership of Merit Cudkowicz, MD, and a Science Advisory Council of international experts, is reimagining how to develop and test the most promising therapies to treat the disease, identify cures and ultimately prevent it.

With many clinical trials and lab-based research studies in progress right now, we are ushering in a new phase of ALS treatment and care. Together, we will find the cures.

 

About the Boston University Questrom School of Business

Founded in 1913, the Boston University Questrom School of Business is a global top-tier academic research business school. Led by Allen Questrom Professor and Dean Susan Fournier, Questrom develops business leaders who create value for the world. Questrom redefines transformational business programs, strengthens partnerships with the business community, advances the impact of research on business, and manages the school as a high-performing enterprise committed to excellence with a service mindset. Comprising a renowned full-time faculty of 165 researchers, teaching faculty, and accomplished practitioners, Questrom generates insights to address today’s business challenges and prepares students with the tools they need to succeed from Day 1 in their professional lives. Questrom’s portfolio of academic programs is robust and includes a Top 20 undergraduate program of over 2,200 students; distinctive MBA offerings including 900 students in a full- and part-time MBA, the affordable Online MBA and specialty MBAs in social impact, health, and digital technology; several thriving specialized masters programs in areas including business analytics, mathematical finance, and management studies; and a rigorous PhD program. More than 50,000 Questrom alumni form a powerful global network of leaders driving value creation that changes the world. QUESTROM MEANS BUSINESS. For more information, visit bu.edu/questrom.

 

About QLS Advisors

QLS is an investment manager that is dedicated to improving outcomes for both patients and investors. We aim to achieve these goals by applying the tools of financial engineering, including modern portfolio theory, machine learning, and healthcare finance to our discretionary investment process. At QLS, we believe that quantitative and fundamental techniques are not mutually exclusive but can be combined to build enhanced portfolios in the healthcare space.

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