Intelligence

Bio bonds, explained

Reporter: Vested staff

This week’s Vested Suggested features stories that the team at Vested is reading and thinking about to begin the week.

Bridge to a cure: Andrea Requier at MarketWatch reports on a new push for a funding mechanism that could result in more investor dollars going towards efforts to find cures for diseases.

“Pharmaceutical and medical research tends to follow a well-worn path in the U.S.: In its early stages, research is funded by the government and nonprofits, and conducted at universities and research institutes. At the end of its life cycle, when the outline of a promising drug or treatment takes shape, venture capitalists and drug companies show up with checkbooks.

“It’s in the middle when things fall apart.”

Karen Petrou, managing partner of Federal Financial Analytics and “one of the most listened-to people in Washington,” has a solution. She is using her considerable influence to support bio bonds, “deeply considered, intricately constructed” financial instruments that would push more of investors’ money into the medical research that can considerably improve the lives of millions by using a carefully structured blueprint. Petrou has a personal attachment to the cause — she is blind — and there is pending legislation that would introduce the bonds to the market.

While Petrou would not make a prediction on the bill’s fate, there is precedent to support its value. Green bonds, which finance energy efficiency, were first viewed with a good dose of skepticism. Now, they reportedly have a market cap of $100 trillion.

Shake-up: General Electric’s stock rallied Monday after its board of directors replaced John Flannery as chief executive with former Danaher CEO Lawrence Culp, who is expected to continue the spinoff of GE’s health-care segment. CNBC has the aggregated analyst reactions.

Settlements: The SEC and Elon Musk reached a (lenient) settlement concerning Musk’s Tweet about going private. Neither Musk nor the company has issued a public statement, so we’ll have to rely on this New York Times anecdote: “On Sunday at 1:08 a.m., just hours after settling the Securities and Exchange Commission’s fraud case stemming from his impulsive tweet on Aug. 7, Mr. Musk sent an email to all Tesla employees. He implored them to work hard, even though it was the weekend.”

Beginning of an era: Vanity Fair has the longread on David Solomon, the new Goldman Sachs CEO, who has plenty on his plate. “Love it or hate it, Goldman Sachs has always displayed an uncanny knack for finding the right man at the right time to lead the firm. Sometimes the right man is a banker; sometimes the right man is a trader. The right man has never been a woman.”

Nevertheless, they persisted: California lawmakers have been all about the grind. First, they passed state-level net neutrality legislation, which was promptly challenged by the Department of Justice. Now, it is the first state to require publicly held corporations headquartered there to include women on their boards.

New grads: MBA applications are on the decline at some of the most prestigious business schools, reported Kelsey Gee for The Wall Street Journal. “Americans are saddled with more college debt than ever, and they have grown increasingly reluctant to leave behind jobs for a year or more to pursue one of the nation’s most expensive degrees, school administrators say—particularly as the economy has improved. In response, schools in recent years have launched cheaper, more flexible or more customized master’s degrees in hot areas such as data science and supply-chain management.”

Read: More stories from our staff about their personal experiences with the financial crisis and its aftermath.