Curious cases of financial engineering in biotech
The article discusses the role of financial engineering in the biotech industry, particularly in drug development. It highlights how innovative financial strategies can help manage the high risks associated with developing new drugs. The piece also raises questions about the implications of these financial practices on the valuation of pharmaceutical companies.
- ▪Drug development has become increasingly risky, with upfront payments rising and success rates declining.
- ▪Financial engineering techniques allow investors to manage risk by bundling multiple drug programs together.
- ▪The article explores whether these financial strategies are changing how the pharmaceutical industry values its projects.
Opening excerpt (first ~120 words) tap to expand
PrimersCurious cases of financial engineering in biotech7k words, 32 minutes reading timeAbhishaike MahajanApr 27, 2026156829ShareNote: finance topics are slightly sensitive, so, while nothing in this article contains proprietary information, I will not include the names of people I talked with for this piece. I appreciate everyone who reached out to help me put this together! Edit: The follow-up to this article has been published: How financial architectures shaped (and will continue to shape) Chinese drug development.IntroductionFinance tries to make failure survivable: the Andrew Lo thesisFinance makes future success tradable: royalties and synthetic royaltiesFinance rewrites the incentives: PRVs and CVRsFinance reaches failure itself: zombie biotechsConclusion: what does finance teach…
Excerpt limited to ~120 words for fair-use compliance. The full article is at Hacker News (Newest).
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