When he was young Dr. Lukas Martman wished to be a veterinary exactly like his father. But as he grew up his interest instead shifted toward the emperor of diseases and studied medicine and specialized in oncology. A few months before completing medical school Wartman was diagnosed with acute lymphoblastic leukemia, He had a low count of red and white blood cells and after further examinations Dr.Wartman state was confirmed. He was a young and talented member of society but the cancer doesn’t care. His cancer is lethal particularly for adults and in most cases using our medications is like telling him just not today. He followed an aggressive chemotherapy for 9 months which drove cancer into remission and enabled him to graduate from Washington University School of Medicine and he pursued 15 more months of chemotherapy treatment. The results were good the cancerous cells disappeared. He had devoted his career into studying and researching the disease that had almost killed him. However, 5 years later ALL was back, but this time the chances of recovery shrink to about 5%. The feeling is devastating when you know that you’re threatened to die by 95% chances at a young age. After another course of treatments involving chemicals and radiations to obliterate his bone marrow, and finally, they used bone marrow transplant operation and made the cancer disappeared for a second time but only to reappeared later, yet this time his chances were unknown because there weren’t many people that made it this far. The doctors were trying chemotherapy, hormone therapy, all desperately. Of course Dr Wartman started to prepare for the farewell and to leave his family and his friends. But his friends unlike many other scenarios were researchers in one of the most advanced centers in the world. They did not give up and pursued approaches they haven’t before. They had fully sequenced the genes of both his cancer cells and healthy cells for comparison and at the same time they analyzed his RNA for clues to what his genes were doing. They discovered the gene that could be responsible for the cancer he had and lucky for them there was a chemical compound that was essentially used for renal cancers but could benefit his exact situation. The compound wasn’t exactly inexpensive and haven’t been used in his case before, but it’s a matter of life and death. And lucky for them it worked out for Dr Wartman.

This story more than anything tells us how good we became in medicine and pharmaceuticals we’ve discovered a huge base of medications so much so that we know about pharmaceuticals that could work out for different issues. But clearly this is not what’s narrated in many occasions. A book such as the one of James Le Fanu “The rise and Fall of Modern Medicine” is one example of many that tells us that we’re having a stagnation and that we’re not delivering innovations as we used to in the old days, revolutionary innovations such as the transplanting surgeries or the discovery of antibiotics. At least we’re not delivering as many innovations as we do in the tech and the digital sector. If we are this good, why from 2003 to 2015 we couldn’t come up with any new medicine to treat Alzheimer a disease that affects around 5 million people in the US. And it costs the government $200 billion annually. The most important question is where is capitalism? Isn’t it a luring business? Where is the competition?

Dr. Andrew Lo at MIT noticed that the number pharmaceutical companies that do research in order to find such medications is decreasing every year. And this is quite a problem, because we’re supposed as we advance in medicine to drive more investments, exactly the opposite effect we have today, something like what we have in tech industries. Why is this happening? What is the problem?

Honestly, our immense knowledge in medicine and our appreciation of human life is the reason behind this reduction and retreat. Today we have a huge base of chemical compounds; each one of them will require experimenting for over a decade before approval and commercialization. Also a simple change in compounds will give them different effects, this in turn necessitates further experimentation and if it all succeeded it doesn’t usually give the final product, as the resulting compound will require conditioning which in turn results into more testing. This of course, isn’t just a question of time, you wish it is. We also have the risk factor, cancer medications’ success rate is only around 5% and the entire research process costs on average over $200 million dollars. And of course some go way above this figure. You can see why it’s easier to convince VC’s and investors in general to throw their money on the next world-changing mobile app than to convince them to invest in such research work. However, if it worked out, you could make revenues of over $10 billion but it’s more like gambling.

Dr. Andrew Lo and his mates published a paper on “Nature Biotechnology,” and by the way Dr. Lo is a financial engineer in MIT. He understands well that the profits are not the whole part of the equation. The fear from the disease and moralities make people donate for healthcare projects. In fact, marketers are successful in launching campaigns that make you sympathize with such causes and donate. Yet he also understands pretty well that charity is really not a reliable source. The job of a financial engineer such as Dr. Lo is to design a reliable source. And no it can’t be “sympathy” it has to be “greed” and profits. He has to make it at the interest of investors to participate in such investments.

Dr. Lo believed that you don’t really need to fight cancer you just need to turn it into numbers. Because at the end of the day all businesses have to be seen as numbers and many investors think this way. You just have to put some interesting numbers on cancer industry that are competing with other industries, and trust me when I tell you it is very doable. Okay! Let’s say that the cost of one experiment is $200 million the probability of its success is 5% if the experiment succeeded and came out with an actual medication this $200 million investment will be turned into $12 billion. Of course if you take only one shot your chances are humble, but if you took 150 shots here is how numbers magically become: the cost will be $30 billion with some careful underwriting will result in 3 medications with the probability of 98% of success. He calculated this by the binomial distribution. The returns of this portfolio from these 3 medications are projected to be $36 billion. Of course, securing these investments will require a hedge fund with some savvy management and risk spreading techniques you can also include in your portfolio some medications for orphan diseases as they cost less due the lighter requirements that they impose. The most important is that a 98% chance makes it really a fine investment opportunity to ignore.