Funding for fundamental science and early-stage translational medicine is becoming scarcer, and at the worst possible time—when we now have the scientific and engineering expertise to make major breakthroughs in our understanding of the molecular basis of many deadly diseases and how to treat or prevent them. The dearth of funding for translational medicine in the so-called “Valley of Death” can be attributed to several factors, but a common thread among them is increasing financial risks in the biopharma industry and greater uncertainty surrounding the economic, regulatory, and political environments within the biomedical ecosystem. Increasing risk and uncertainty inevitably leads to an outflow of capital as investors and other stakeholders seek more attractive opportunities in other industries.
By applying financial techniques such as portfolio theory, securitization, and option pricing to biomedical contexts, more efficient funding structures can be developed to reduce financial risks, lower the cost of capital, and bring more life-saving therapies to patients faster. By taking this course, students will gain the background, resources, and framework to influence the healthcare industry.
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Syllabus
Unit 0: Introduction to Healthcare Finance
Current Challenges in Healthcare Finance
Biomedical Megafund FAQs
Unit 1: Present Value
Market Efficiency, Wisdom of Crowds and Madness of Mobs
Time Value of Money, and Drug Pricing Examples
Buying Cures vs. Renting Health
Inflation
Unit 2: Capital Budgeting
Cash Flows, NPV and IRR
Genentech and Herceptin Funding Example
Volatility, Risk and Uncertainty: Framework and Application to Drug Approval
Unit 3: Stocks and Bonds
Dividend Pricing Model
Corporate Bonds
Debt in the Biopharma Industry
Unit 4: The CAPM and Diversification
The CAPM
Arbitrage Pricing Theory
Portfolio Theory: Examples and Special Cases
Portfolio Theory in a Biomedical Context
Unit 5: Options
Option Pricing Theory
Real Options and Biomedical Examples
Monte Carlo Simulations
Unit 6: Clinical Trials
Drug Development & Clinical Trials
Randomized Clinical Trials
Statistical Framework for Clinical Trials
Bayesian Adaptive Trials
Unit 7: Venture Capital and New Business Models
Introduction to VC financing
The Term Sheet
Biotech Valuation
Venture Philanthropy
Unit 8: Securitization
The Financial Crisis and Securitization
Megafunds & Their Limits
Unit 9: Healthcare Analytics
Risk and Return in the Biopharma Industries
Clinical Trial Success Rates
Predictive Analytics for Drug Approvals and Clinical-Phase Transitions
Bayesian Decision Analysis for Randomized Clinical Trials
20 weeks long, 4-6 hours a week
Free Online Course (Audit)