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Can financial engineering cure cancer?

November 03, 2016


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In the history of major league baseball, even the lowest batting average of all time is three times the success rate you can expect in cancer drug development. The risks of drug failures are so high that no one wants to fund it. Scientists, clinicians, and drug developers may be on the verge of breakthroughs, but we’ll never see them through in the current environment. Given that cancer is a leading cause of death worldwide with enormous economic impact, shouldn’t science be driving the financing? Instead financing is driving the science.

Andrew Lo, a finance professor at MIT Sloan School of Management, has an idea that he hopes will reverse this trend: applying Wall Street-style financial engineering to the funding of cancer and other deadly diseases. Just as more hits increase the chance of a home run, Lo proposes that combining many drug-development projects within a single portfolio, or megafund, might improve the odds of successful drug development and reduce the investment risk.

For the Tangerine Lecture in Finance, Lo will discuss how tricks of the financial trade, such as portfolio theory and securitization, can be used to solve one of the most pressing medical problems of our time.

Event Details

Tangerine Lecture in Finance

November 3, 2016

5:30-6 p.m. – Registration and reception
6-7 p.m. – Presentation from Andrew Lo and Q&A
Location: Ivey's Tangerine Leadership Centre, King & York St., Toronto

This event is now sold out and registration is closed.


Topics You Will Explore

  • Why drug development is getting harder, the financial risk is growing, and funding is declining
  • How financial engineering can improve the odds of drug development and lower the financial risk
  • What tricks of the financial trade can help   

About the Speaker

Andrew W. Lo is the Charles E. and Susan T. Harris Professor at the MIT Sloan School of Management, the director of MIT’s Laboratory for Financial Engineering, and a principal investigator at MIT’s Computer Science and Artificial Intelligence Lab. He received a BA in economics from Yale University in 1980, and an AM and PhD in economics from Harvard University in 1984.

His most recent research focuses on systemic risk in the financial system, evolutionary models of investor behaviour, and applying financial engineering to develop new funding models for biomedical innovation.

He has published extensively in academic journals and his most recent book is Hedge Funds: An Analytic Perspective. His awards include Sloan and Guggenheim Fellowships, the Paul A. Samuelson Award, the Harry M. Markowitz Award, the CFA Institute’s James R. Vertin Award, and election to Academia Sinica, the American Academy of Arts and Sciences, the Econometric Society, and Time Magazine’s 2012 list of the “100 most influential people in the world.” He has also received teaching awards from the University of Pennsylvania and MIT.

He is an advisory board member for the CFTC, New York Fed, OFR, SEC, and a member of the Board of Overseers for Beth Israel Deaconess Medical Center.

About the Moderator 

Michael King is an Associate Professor of Finance, Co-director of the Scotiabank Digital Banking Lab, and holds the Tangerine Chair in Finance.

He joined the finance group at the Ivey Business School in 2011 after two decades working in international financial markets, both in the private and public sectors.

King began his career in investment banking and trading working between 1990 and 1998 in New York, London, and Zurich with Credit Suisse and RBC Dominion Securities. During this period, he obtained the Chartered Financial Analyst (CFA) designation. After completing his PhD at the London School of Economics in 2001, King joined the Bank of Canada in Ottawa where he worked in increasingly senior positions in the financial markets and international departments. From 2006 to 2008, he also taught part time on the Queen's Executive MBA program. From 2008 to 2011, He worked for the Bank for International Settlements (BIS) in Basel, Switzerland, where he contributed to the analysis of the global financial crisis, wrote about developments in international financial markets for the BIS Quarterly Review, researched the economic implications of the revised Basel Capital Adequacy Accord (Basel III), and analyzed the results of the 2010 Triennial Global Foreign Exchange survey.

About the Tangerine Lecture in Finance

The Tangerine Lecture in Finance series, sponsored by Tangerine, brings you thought-provoking and practical information about the world of finance.



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