Another Side of Learning About Money: Hows and Whys of Research Funding

I talked a little about money and personal finance in the context of healthy life extension yesterday. Economics is both the root and representation of society and human interaction; modest understanding of the flows and practicalities will bring you great advantage in your endeavors.

I imagine that many of the folk reading Fight Aging! are very interested in the rate and details of progress in medical research, and specifically in work that may lead to healthy life extension technologies. If you're interested in medical progress and don't understand the workings of investment and commercialization, then you are left largely blind. You will not understand why some work succeeds while other work does not; you will fail to grasp the full significance of many news stories; you will not have a realistic view of the near future of medicine; you will not understand how and why some actions, events and situations damage progress and hinder the advance of new medical technology from laboratory to clinic.

Medical research funding in the US is approximately 30-40% public, 50-60% private for-profit and 10% philanthropic; most to the hard work of bringing science from laboratory to market is accomplished with private funding. So best to learn a little about how that process and culture works, no? A good place to start, with respect to recent private investment in healthy life extension and related research, might be the book "The Quest for Human Longevity."

Most other popular books on human longevity are focused almost exclusively on scientific ideas and breakthroughs in life-extension research, and they typically avoid any money talks as inappropriate subject. ... This somewhat idealistic perspective is challenged in a new book, which describes in a great detail how important money is in modern entrepreneurial world of life-extension and anti-aging research business. The book provides an alternative, more realistic perspective that financial incentives are driving scientific innovations in anti-aging studies by stimulating researchers to take risks and to work really hard.

While thinking along these lines, I bumped into a short article on venture investment in biotechnology today that gives some insight into the way in which investors think.

While the public markets for biotechnology companies have historically been an opportunity for very significant returns, the recent past markets have not been as attractive. With significant downward pressure on public valuations for many biotechnology companies, venture capital investors have had to evolve some of their thinking.

...

With the markets valuing many new public companies in the range around $150 million (as opposed to $300 million), investors can no longer invest in companies that require $80-100 million to mature to the point where they can go public. This has forced companies and investors to be much more capital efficient and to pursue creative paths to product development and ultimately commercialization. This might manifest in the pursuit of more developed assets or the adoption of clinical development plans that can be abbreviated.

Investment environments are something like the weather - too many variables to predict well at the smaller scale, but big storms rarely come out of the blue. Investors react to this weather, which can make all the difference in funding of early stage companies, more speculative research, or research that will take longer to mature.

This is just a small slice of life from a broad, changing culture, however. I'm not familiar with the breadth of venture investment and private research funding, and neither do you need to be - the general basics, incentives and practicalities of venture investment, growth of companies and commercialization of products are all you need to gain a much better understanding of the world around you. This, like an understanding of money in the context of personal finance, is really nowhere near as hard as you might think. Much of it is intuitive, and the more you look at it, the easier it becomes to figure out the rest.

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