A multidisciplinary team of researchers has introduced a groundbreaking financing model that could transform how clinical trials for amyotrophic lateral sclerosis (ALS) therapies are funded. The study, published in PLOS One, outlines an innovative royalty-based investment structure designed to accelerate therapeutic development for ALS and other serious diseases by merging the efficiencies of adaptive platform trials with novel funding mechanisms.
Addressing the ALS Funding Crisis
ALS, also known as 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.
The research team, comprising experts from the MIT Sloan School of Management, the Sean M. Healey & AMG Center for ALS at Massachusetts General Hospital, Questrom School of Business at Boston University, and QLS Advisors, proposes 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.
The Fund of Adaptive Royalties Model
Dubbed a "Fund of Adaptive Royalties" (FAR), this model leverages adaptive platform trials, which allow multiple drug candidates to be tested simultaneously under a single master protocol. Results are interpreted on a real-time basis to determine efficacy or futility, offering significant advantages over traditional trial designs.
Drawing on data from the HEALEY ALS Platform Trial administered by the Healey & AMG Center for ALS at MGH and realistic assumptions, the researchers' simulated fund generated an expected return of 28%, with a 22% probability of total loss. These returns may be attractive to more risk-tolerant and impact-driven investors such as hedge funds, sovereign wealth funds, family offices, and philanthropists.
Potential for Mainstream Investment
The 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.
"ALS clinical trials face significant hurdles—from high costs and long timelines to limited funding pools," said Merit E. Cudkowicz, MD, MSC, Executive Director at 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."
Bridging Biomedical Innovation and Capital Markets
The 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.
"This financing framework addresses one of the core issues in biomedical innovation—bridging the valley of death between discovery and delivery," said co-author Andrew W. 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."
Broader Applications
While the 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.
The study represents a multidisciplinary collaboration among physicians, clinical trial experts, and financial engineers, bridging the gap between biomedicine and capital markets and laying a new path forward for how lifesaving therapies are financed and delivered.
