Another magic cure from cancer. Post No 18. The American way.

This time we have a super-economic idea as a magic cure. The idea is really big as everything in US.

MIT economist pitches cancer megafund. Well, let’s deconstruct the situation. Let’s start from the beginning. The economist (or the author of the article) is seemed to be strange:

He (the economist Andrew W. Lo, the MIT finance professor and hedge fund manager) is known for his “adaptive markets” financial theory, which maintains that prices and investors are not always rational.

Well, this statement is great! What a merit! EVERY successful businessman knows that “prices and investors are not always rational”.

And this economist proposes the following:

Now he is proposing an idea that would go beyond his own firm, creating a “megafund” that would flood early-stage research in cancer drugs with $30 billion. By supporting as many as 150 experimental compounds at any one time and bringing in large numbers of investors, he argues, the risk would be spread over a much larger base.

Even if just a few of the treatments prove effective, Lo estimates the fund would be profitable, earning equity investors annual returns of 7 to 10 percent.

“Only with massive scale can you reduce the risk of this early-stage research,’’ said Lo, who pitched his megafund idea in a paper published Sunday in the journal Nature Biotechnology.

“Finance is a means to an end. It’s a way to allow us to collaborate on problems of unprecedented scale,” he said.

Typically research on cancer cures — already now into the billions of dollars — is funded by the government and private companies. But it’s a high-risk proposition. It takes about $200 million just to get a new medicine to the point it can be tested in humans, Lo said. Even then, most trials end with disappointing results.

Only about half of the treatments that make it to final testing are submitted to the Food and Drug Administration for approval, said Kenneth I. Kaitin, director of the Tufts Center for the Study of Drug Development in Boston. Getting to that point takes about 8½ years, he said.

“Promising research that could potentially lead to new products is not being pursued, simply because of a lack of funding,’’ said Kaitin, who thinks Lo’s idea could be effective.

In other words he proposes the same approach which is used by Big Pharma: if you need to solve a problem – burn money, if you failed with this solution – just burn more money until you succeed. This way definitively will not help for development of new oncological products (just because it is widely used by Big Pharma) but will produce some benefits to the participants. And for the economy: new working places will be created and $30B will be successfully removed from the market. So I judge the proposal worth of trying just for the sake of macro economy. Let’s burn some more!