This seems like a data problem related to the one we had at the SEC when we converted from document disclosure to data disclosure using XBRL. The market doesn't incentivize financial reporting, so the SEC mandates it because markets work better when there is more data to encourage more efficient targeting of financial investment. Similarly, the market does not promote disclosure for failed peptide test data, so mandated structured reporting into a database corresponding to EDGAR would make sense to support efficient "investment" of scientific and medical attention. The incentive to comply in the markets is the opportunity to get public investment. How might we create or strengthen similar or stronger incentives to invest in peptide development? The New York Stock Exchange was critical to the history of improving private capital allocation so much so that it caused competitors to emerge and U.S. capital markets remain the strongest in the world. Participants must report both positive and negative financial data to participate. Could someone create something like the "New York Peptide Data Exchange" with similar incentives and requirements to report both positive and negative data about peptide effectiveness?
Thanks for the link Paul! The idea that corporate disclosures for public companies must be mandatory, and audited is kind of common-place in securities regulation, and has been for getting on for a century. There were a range of academic debates about this in the 1980s, but common sense prevailed (see Jack Coffee, 1984 -- Market Failure and the Economic Case for a Mandatory Disclosure System -- https://doi.org/10.2307/1073083). The SEC was one of the first to recognise that we are in a digital age and that mandatory *digital* disclosure is necessary to overcome the perceived asymmetric benefits associated with reporting. Something like 84% of global market cap is now covered by mandatory digital disclosures these days, across a huge number of markets around the world, nearly 15 years after Paul and his colleagues did their groundbreaking work. Why mandatory? Corporates frequently don't perceive that their own specific disclosure is in their interests, while generally understanding that markets can't function without all reports being accessible, discoverable, structured (that is -- digital), and searchable.
I wonder, without pretending to understand the dynamics of this kind of research work into peptides, if there is an analog in this field. If the NIH, NSF and other similar grantor organisations (like the UK's NICH) made it a core grant condition that the raw peptide data associated with each piece of research must be made public and accessible in a (suitably funded) core repository, the insights should stack up quickly. The /negative/ findings are perhaps the most impactful and most important aspect of all this, but as the author points out, these tend to be only stored in the great circular filing cabinet in the sky. This kind of mandatorily contributed data might be more comprehensive, faster to pull together and cheaper overall than a top down approach.
Excellent piece—I really enjoyed the combination of an accessible explanation of biotech innovation and a clear call to action with back-of-the-envelope calculations actually giving numbers for expected timelines and costs.
Love the idea of a stronger push against AMR, but as I understand it all of our antibiotic stagnation problems are downstream of the financials. I've lost the source, but I saw a chart classifying drugs by expected financial payoff, and antibiotics were the lowest of any category. They had about -30% profit margin: something like $300M average to get through FDA and manufacturing, and $200M recouped. If 20k people die in the US each year, it does seem like there should be sufficient market—e.g. $20k for a really good antibiotic for those with resistant sepsis, or $2k for anyone with serious resistance risk, and then international sales. But it would also have to beat out the many existing antibiotics; usually you don't get to the 5th line of defense. But given the number of other drug types with much larger markets where even a weak drug can be profitable, I think it's just an unprofitable domain to focus your R&D on if you're a big pharma company.
On the other hand, if peptides do open up the door to high likelihood of much more effective antibiotics, then hopefully this could change. I think a large NGO R&D subsidy might be needed to push it through in a timely fashion though.
This seems like a data problem related to the one we had at the SEC when we converted from document disclosure to data disclosure using XBRL. The market doesn't incentivize financial reporting, so the SEC mandates it because markets work better when there is more data to encourage more efficient targeting of financial investment. Similarly, the market does not promote disclosure for failed peptide test data, so mandated structured reporting into a database corresponding to EDGAR would make sense to support efficient "investment" of scientific and medical attention. The incentive to comply in the markets is the opportunity to get public investment. How might we create or strengthen similar or stronger incentives to invest in peptide development? The New York Stock Exchange was critical to the history of improving private capital allocation so much so that it caused competitors to emerge and U.S. capital markets remain the strongest in the world. Participants must report both positive and negative financial data to participate. Could someone create something like the "New York Peptide Data Exchange" with similar incentives and requirements to report both positive and negative data about peptide effectiveness?
Thanks for the link Paul! The idea that corporate disclosures for public companies must be mandatory, and audited is kind of common-place in securities regulation, and has been for getting on for a century. There were a range of academic debates about this in the 1980s, but common sense prevailed (see Jack Coffee, 1984 -- Market Failure and the Economic Case for a Mandatory Disclosure System -- https://doi.org/10.2307/1073083). The SEC was one of the first to recognise that we are in a digital age and that mandatory *digital* disclosure is necessary to overcome the perceived asymmetric benefits associated with reporting. Something like 84% of global market cap is now covered by mandatory digital disclosures these days, across a huge number of markets around the world, nearly 15 years after Paul and his colleagues did their groundbreaking work. Why mandatory? Corporates frequently don't perceive that their own specific disclosure is in their interests, while generally understanding that markets can't function without all reports being accessible, discoverable, structured (that is -- digital), and searchable.
I wonder, without pretending to understand the dynamics of this kind of research work into peptides, if there is an analog in this field. If the NIH, NSF and other similar grantor organisations (like the UK's NICH) made it a core grant condition that the raw peptide data associated with each piece of research must be made public and accessible in a (suitably funded) core repository, the insights should stack up quickly. The /negative/ findings are perhaps the most impactful and most important aspect of all this, but as the author points out, these tend to be only stored in the great circular filing cabinet in the sky. This kind of mandatorily contributed data might be more comprehensive, faster to pull together and cheaper overall than a top down approach.
Excellent piece—I really enjoyed the combination of an accessible explanation of biotech innovation and a clear call to action with back-of-the-envelope calculations actually giving numbers for expected timelines and costs.
Love the idea of a stronger push against AMR, but as I understand it all of our antibiotic stagnation problems are downstream of the financials. I've lost the source, but I saw a chart classifying drugs by expected financial payoff, and antibiotics were the lowest of any category. They had about -30% profit margin: something like $300M average to get through FDA and manufacturing, and $200M recouped. If 20k people die in the US each year, it does seem like there should be sufficient market—e.g. $20k for a really good antibiotic for those with resistant sepsis, or $2k for anyone with serious resistance risk, and then international sales. But it would also have to beat out the many existing antibiotics; usually you don't get to the 5th line of defense. But given the number of other drug types with much larger markets where even a weak drug can be profitable, I think it's just an unprofitable domain to focus your R&D on if you're a big pharma company.
On the other hand, if peptides do open up the door to high likelihood of much more effective antibiotics, then hopefully this could change. I think a large NGO R&D subsidy might be needed to push it through in a timely fashion though.