BridgeBio Announces Publication of Case Study Exploring Portfolio Theory’s Impact on Biomedical Innovation in The Journal of Portfolio Management
BridgeBio Pharma (BBIO) announced the publication of a case study in The Journal of Portfolio Management, exploring how portfolio theory impacts biomedical innovation. The study, co-authored by BridgeBio's senior management and MIT professor Andrew Lo, examines the company's unique business model that applies portfolio theory to drug development. Founded in 2015, BridgeBio's approach involves diversifying risk by investing in multiple uncorrelated drug development programs, rather than focusing on a single lead candidate. This strategy aims to increase success probability, create stable returns, and attract broader investment, particularly for early-stage genetic disease research.
BridgeBio Pharma (BBIO) ha annunciato la pubblicazione di uno studio di caso nel The Journal of Portfolio Management, che esplora come la teoria del portafoglio influenzi l'innovazione biomedica. Lo studio, co-autore di BridgeBio e del professor Andrew Lo del MIT, analizza il modello di business unico dell'azienda che applica la teoria del portafoglio allo sviluppo di farmaci. Fondata nel 2015, l'approccio di BridgeBio prevede la diversificazione del rischio investendo in diversi programmi di sviluppo di farmaci non correlati, piuttosto che concentrarsi su un singolo candidato principale. Questa strategia mira ad aumentare la probabilità di successo, creare rendimenti stabili e attrarre investimenti più ampi, in particolare per la ricerca su malattie genetiche in fase iniziale.
BridgeBio Pharma (BBIO) anunció la publicación de un estudio de caso en The Journal of Portfolio Management, que explora cómo la teoría del portafolio impacta en la innovación biomédica. El estudio, coautorado por la alta dirección de BridgeBio y el profesor Andrew Lo del MIT, examina el modelo de negocio único de la compañía que aplica la teoría del portafolio al desarrollo de medicamentos. Fundada en 2015, el enfoque de BridgeBio consiste en diversificar el riesgo al invertir en múltiples programas de desarrollo de medicamentos no correlacionados, en lugar de centrarse en un solo candidato principal. Esta estrategia busca aumentar la probabilidad de éxito, generar rendimientos estables y atraer inversiones más amplias, especialmente para la investigación de enfermedades genéticas en etapa temprana.
BridgeBio Pharma (BBIO)는 The Journal of Portfolio Management에 사례 연구를 발표했으며, 포트폴리오 이론이 생물의학 혁신에 미치는 영향을 탐구합니다. 이 연구는 BridgeBio의 고위 경영진과 MIT 교수인 앤드류 로가 공동 저자이며, 약물 개발에 포트폴리오 이론을 적용하는 회사의 독특한 비즈니스 모델을 검토합니다. 2015년에 설립된 BridgeBio의 접근 방식은 단일 주요 후보에 집중하기보다는 상관관계가 없는 여러 약물 개발 프로그램에 투자하여 위험을 분산시키는 것입니다. 이 전략은 성공 확률을 높이고, 안정적인 수익을 창출하며, 초기 단계 유전 질환 연구를 위한 더 넓은 투자를 유치하는 것을 목표로 합니다.
BridgeBio Pharma (BBIO) a annoncé la publication d'une étude de cas dans The Journal of Portfolio Management, explorant comment la théorie des portefeuilles impacte l'innovation biomédicale. L'étude, coécrite par la direction de BridgeBio et le professeur Andrew Lo du MIT, examine le modèle commercial unique de l'entreprise qui applique la théorie du portefeuille au développement de médicaments. Fondée en 2015, l'approche de BridgeBio consiste à diversifier les risques en investissant dans plusieurs programmes de développement de médicaments non corrélés, plutôt qu'en se concentrant sur un seul candidat principal. Cette stratégie vise à augmenter la probabilité de succès, à créer des rendements stables et à attirer des investissements plus larges, en particulier pour la recherche sur les maladies génétiques à un stade précoce.
BridgeBio Pharma (BBIO) kündigte die Veröffentlichung einer Fallstudie im The Journal of Portfolio Management an, die untersucht, wie die Portfoliotheorie die biomedizinische Innovation beeinflusst. Die Studie, die von der Seniorenführung von BridgeBio und MIT-Professor Andrew Lo mitverfasst wurde, betrachtet das einzigartige Geschäftsmodell des Unternehmens, das die Portfoliotheorie auf die Arzneimittelentwicklung anwendet. Gegründet im Jahr 2015, besteht der Ansatz von BridgeBio darin, das Risiko durch Investitionen in mehrere unkorrelierte Arzneimittelentwicklungsprogramme zu diversifizieren, anstatt sich auf einen einzigen Hauptkandidaten zu konzentrieren. Diese Strategie zielt darauf ab, die Erfolgswahrscheinlichkeit zu erhöhen, stabile Renditen zu schaffen und breitere Investitionen zu gewinnen, insbesondere für die Forschung zu genetischen Erkrankungen in der Frühphase.
- Innovative business model applying portfolio theory to reduce investment risk
- Diversified approach enables development of multiple drug programs simultaneously
- Strategy designed to attract broader range of investors
- Operating in challenging life science financing environment with contracted capital access
Insights
The publication of BridgeBio's portfolio theory case study in The Journal of Portfolio Management highlights a pioneering approach to biotech investment and drug development. Their model of diversifying across multiple uncorrelated drug programs represents a significant innovation in biotech financing, potentially reducing investment risk while accelerating drug development.
The strategy has proven particularly valuable during the recent contraction in life science financing. By maintaining a diversified portfolio approach, BridgeBio has demonstrated resilience in navigating market volatility. This model has created new channels for both traditional investors and philanthropists to support genetic disease research, potentially expanding the company's funding sources.
While this publication itself is not market-moving news, it validates BridgeBio's business model and could positively influence investor perception of the company's risk management approach and long-term sustainability.
BridgeBio's application of modern portfolio theory to drug development represents a significant evolution in biotech business models. Traditional biotech companies often rise or fall based on single drug candidates, but BridgeBio's "multiple shots on goal" approach creates a more balanced risk profile.
This strategy enables the company to pursue early-stage research that might be too risky for traditional pharma companies, particularly in rare genetic diseases. The model's success could influence industry-wide approaches to drug development financing and risk management, potentially leading to more efficient capital allocation in the biotech sector.
For investors, this approach offers a unique value proposition - exposure to multiple potential breakthrough therapies while maintaining a more stable risk profile than typical single-program biotech investments.
- Case study co-authored by members of BridgeBio senior management and BridgeBio co-founder and MIT professor, Andrew W. Lo, Ph.D.
- Case study features BridgeBio’s unique model that uses portfolio theory to enable early-stage research for genetic diseases and conditions that are not typically addressed by the pharmaceutical industry
PALO ALTO, Calif., Nov. 05, 2024 (GLOBE NEWSWIRE) -- BridgeBio Pharma, Inc. (Nasdaq: BBIO) (“BridgeBio” or the “Company”), a new type of biopharmaceutical company focused on genetic diseases, today announced that a case study, “Applications of Portfolio Theory to Accelerating Biomedical Innovation,” was published in The Journal of Portfolio Management. The case study is intended to explore the real-world application of portfolio theory within the biopharmaceutical industry as a unique approach to driving development of innovative therapies, leveraging BridgeBio’s founding and evolution as an example. The case study is featured in the Journal’s 50th anniversary issue, a special issue celebrating the foundations of modern finance such as Dr. Harry Markowitz’s pioneering work and highlighting the possible future directions of finance.
In 2012, Andrew Lo, Ph.D., co-founder and director of BridgeBio and Charles E. and Susan T. Harris professor at MIT’s Sloan School of Management, began the initial research on the applications of portfolio theory that would ultimately lead to the formation of BridgeBio. Shortly after, he began engaging BridgeBio co-founders, Neil Kumar, Ph.D., chief executive officer, and Brian Stephenson, Ph.D., chief financial officer, on the practical implementations of this theory to form a biotechnology company, a novel approach within the industry at the time.
“While portfolio theory had been applied successfully across multiple industries, its use in the biopharmaceutical industry has just begun to take shape over the last decade, with BridgeBio at the forefront of these efforts upon its founding,” said Dr. Lo. “This approach, first and foremost, is designed to enable the development of treatments at a potentially faster cadence for patients than the typical business model, by de-risking through ‘multiple shots on goal’, thereby attracting greater funding from the investment community. I’m grateful to see the hard work put into the formation and evolution of BridgeBio being recognized by The Journal of Portfolio Management, and look forward to sharing it with a broader audience who might take something from our experience and help more patients.”
BridgeBio was founded in 2015 on the principles of modern portfolio theory, formulated by financial economist Harry Markowitz in 1952, with a goal of diversifying risk by investing in multiple uncorrelated drug development programs, rather than a traditional model focused on a lead drug candidate. The portfolio theory approach was designed around the concept that by spreading investment across various programs, the company increases the likelihood that at least some programs would succeed, creating a potentially more stable return profile and attracting a broader range of investors. Application of this theory furthers a higher volume of early-stage research, which typically comes with higher risk.
“BridgeBio was founded at the intersection of a deep interest in portfolio theory and novel genetic medicines for patients in need. The application of portfolio theory, based on Andrew’s insights, is what allowed us to prosecute so many programs for patients that would have otherwise been still sitting on shelves,” said Dr. Kumar. “I’m grateful, therefore, to be able to publish this case study in The Journal of Portfolio Management, and excited to share more about how we make decisions at BridgeBio, which has much more to do with the principles of ROIC, g, WACC, POTS, and diversification than is generally understood. I hope our approach can serve as a blueprint for others attempting to employ novel approaches to biopharma to serve patient unmet needs.”
“In recent years, the financing of life science innovation has been challenging, with a contraction in capital access. By maintaining a diversified portfolio, BridgeBio has been able to weather the ebbs and flows of market fluctuations and the drug development process over the years. The company’s unique approach to structuring financing has created a robust channel for investors and philanthropists to support genetic disease drug development, and for BridgeBio to continue to target multiple different indications at once,” added Dr. Stephenson.
The article was co-authored by Dr. Lo and members of BridgeBio senior management, including Dr. Kumar, Dr. Stephenson and Dr. Chinmay Shukla, Vice President, Strategic Finance.
About BridgeBio Pharma, Inc.
BridgeBio Pharma (BridgeBio) is a new type of biopharmaceutical company founded to discover, create, test and deliver transformative medicines to treat patients who suffer from genetic diseases. BridgeBio’s pipeline of development programs ranges from early science to advanced clinical trials. BridgeBio was founded in 2015, and its team of experienced drug discoverers, developers and innovators are committed to applying advances in genetic medicine to help patients as quickly as possible. For more information visit bridgebio.com and follow us on LinkedIn, Twitter and Facebook.
BridgeBio Contact:
Vikram Bali
contact@bridgebio.com
(650)-789-8220
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