Karen Petrou’s office is bare. A desk and chair, a computer, a sofa. There is no art on the wall. In this modest space—in a not-so-modest Dupont Circle building—Petrou runs a consultancy, Federal Financial Analytics, where she has become one of the most influential financial regulation experts in the world. On a given day, she fields dozens of calls from government officials, bankers, investors, and reporters, all of whom want her input on some esoteric regulatory issue that only a tiny number of human beings understand.
For someone with that level of accomplishment, you would expect her walls to be lined with pictures of her posing with important people. You might also expect an expensive painting or sculpture, something to convey her sophistication and status. But Petrou has no need for these ornaments. She wouldn’t be able to see them.
Petrou, who is sixty-five, is no expert on medical technology or pharmaceutical research. But after a highly successful career—the American Banker called her “the sharpest mind analyzing banking policy today—maybe ever” in 2012—Petrou has trained her intellect on the task of curing blindness. She has reached a point in her life and career at which she wants to use her professional expertise to make an impact outside her field and eradicate the source of her greatest personal adversity.
Petrou is the architect of a bill introduced in Congress last July that would create so-called Eye Bonds, a package of loans, backed by a limited government guarantee, to support research into blindness cures that would otherwise stall.
The insight behind the bill, called the Faster Treatments and Cures for Eye Diseases Act, is that the lack of a cure for blindness is not a scientific problem; it’s a financial one. For years, translational research—the point at which science is turned into a product by trying it on human patients in the hope of getting FDA approval—has been referred to as the “valley of death.” In countless cases, promising therapies and other interventions can’t get the funding they need when it’s time to test treatments on people.
For Petrou, who started going blind as an adolescent, this has been painfully frustrating. But last December, the Federal Drug Administration approved a gene therapy called Luxturna that can substantially improve eyesight in children suffering from a rare form of childhood-onset blindness. It was one of the few drugs that got past the valley of death. Petrou believes that if Luxturna’s fate were not such a rare exception, her fate could be changed too. “I believe that if we could get this promising research past the valley of death, I could see in ten years,” she said.
Karen Petrou grew up in the well-to-do town of Briarcliff Manor, a Westchester County suburb north of New York City. She was driven and ambitious, a good student who stayed out of trouble. But she wasn’t good at sports. “I knew I didn’t quite see things the way others did.” But, she said, “I just assumed I was a crappy athlete because I couldn’t find a softball.”
It wasn’t until she hit her teens that she noticed something was off. “It never really occurred to me until I took driver’s ed and realized that the double-yellow line wasn’t really in my line of vision,” she said. At eighteen, she was diagnosed with retinitis pigmentosa, a genetic disorder that causes a breakdown and loss of cells in the retina. The doctor said she would be blind by the age of twenty-five. “It was not a good day around my family,” Petrou recalled.
In fact, Petrou turned out to have a slower version of the disorder: she didn’t lose her reading vision until she was in her mid-thirties and didn’t need a guide dog until she was fifty. But she lived the rest of her younger years in dread of what was to come. Today, she is almost completely blind. She described her life as one of “constant improvisation”—learning to live with less and less sight and adapting to advances in technology. Her phone’s voiceover capabilities have made things much easier, and with the layout of a computer keyboard fully ingrained in her memory, she probably types faster than you do.
Petrou recognizes that as a child of privilege, she had more opportunities than most others who lose their sight early. After graduating from Wellesley College, she studied briefly at MIT, and earned a master’s degree at the University of California, Berkeley. Sexism was a constant feature of her academic career, which prepared her for a life in corporate America while going blind. “I was already used to people thinking I wasn’t supposed to be where I was,” she said. “That was good combat training.”
After earning her degree from Berkeley, Petrou became an officer at Bank of America’s Washington, D.C., office. She rose through the ranks fast, becoming a vice president by age twenty-seven. But her trajectory stalled when her boss said that while he’d like to promote her to senior vice president, he wasn’t comfortable elevating a woman to that role. “After that, I decided to start my own firm,” she said. In 1985, she cofounded Federal Financial Analytics.
Along with being one of the most coveted financial consultants in town, Petrou has also been a part-time public intellectual, weighing in on crucial regulatory issues before influential audiences like Congress, the Federal Reserve, and the Brookings Institution. Her expert opinion has frequently been quoted in the New York Times and the Wall Street Journal. And she’s currently writing a book, which will be published this spring by Yale University Press, about how regulatory policies after the 2008 financial crisis exacerbated the nation’s wealth divide.
As a blind person, Petrou is a rarity not only in the financial elite but in the workforce, period. “More than 70 percent of blind adults in America are unemployed,” she said, accurately citing the most recent statistics. “Because the stereotype of blindness, in my opinion, is worse than the actual disease. Parents are terrified that their children will be the equivalent of pencil sellers their whole lives.”
Petrou has defied those stereotypes, but she is still not immune to occasional humiliations. At a recent dinner party, she was sitting next to her husband when someone asked him, rather than her, “What would she like to eat?” There are other blows to the spirit. Recently, Petrou was riding the elevator with a colleague and with Zuni, her guide dog. Another man asked her colleague how old his German Shepherd was. “He was clearly talking to him, because a blind person with a dog is clueless,” Petrou said.
Petrou’s connection with Zuni runs deep. Every day they travel together by Metro from her home in Northwest Washington to her office near Dupont Circle. There are some people, however, for whom the dog is a problem. “There are people I know who won’t have us over to their house, because we won’t go anywhere without the guide dog,” said her husband, Basil Petrou, who along with Karen is a managing partner at Federal Financial Analytics. “It’s not a pet. The guide dog is working. We’re not asking to bring our pet to the house, but people don’t understand.”
Karen added, “We don’t like them anyway.”
The idea for Eye Bonds began in 2013 at a Foundation Fighting Blindness (FFB) board meeting in Boston. Petrou and her fellow board members talked to venture capitalists, who explained why it was so hard to fund translational research. Clinical trials, they said, were too risky—the chance of the treatments failing and investors losing money was high. Even if they are successful, translational research can take from eight to seventeen years, whereas most venture capitalists want a five-year payout on their investments.
Because of that reality, attempts to fix visual impairments have gained little momentum. While thousands of ideas get through basic research, they tend to come to an abrupt standstill. Most of the funding comes from the National Institutes of Health (NIH) and private foundations, like the FFB. By themselves, these organizations cannot provide enough support for the range of promising research options. The FFB, Petrou said, gets roughly 100 grant applications every year, about ten of which its scientists consider highly promising. It can only fund one or two.
Ben Yerxa, the foundation’s CEO, said his organization put $2 million into groundbreaking research at the University of South Carolina, where scientists are working on developing a new class of compounds as neuro-protective agents for retinitis pigmentosa, which affects roughly one in 4,000 Americans, including Petrou. But USC needs more money to test those compounds out on patients. “Those situations cause us to scratch our heads and wonder what’s wrong with the system,” Yerxa said.
To make sure more promising blindness treatments made it through the valley of death, Petrou realized, she needed to make the research more attractive to investors. That’s where Eye Bonds come in. The bonds are simply a way of packaging federally backed loans to researchers who currently struggle to get funding. The bonds would bundle together several promising blindness treatments, so that instead of having to make a risky bet on one small researcher—like the lab at USC—an investor’s risk would be diversified. The federal government would also mitigate the risk by guaranteeing up to half the loan principal. (The bill introduced in July would establish a pilot program allowing the government to guarantee up to $1 billion in loans. It would also allow the government to take equity in the research.)
Each year, four or five bonds would be issued, each for no more than $250 million. The National Eye Institute, a division of the NIH, would select the research projects to be funded by the bonds. Even if only one of these projects got approved by the FDA and became a commercial success, Petrou argued, the profit would pay off all the other loans. The investments would be further protected, she explained, by using intellectual property rights—namely, drug patents—as collateral.
“It’s the same concept as a mortgage,” she said. “You take out a loan and get a house. If you don’t pay back the loan, [the bank] can take your house. If nothing pans out, all the loans have to be paid back.” The only way Eye Bonds would end up costing the taxpayers money is if none of the projects panned out and the collateral became worthless over time.
After Petrou shared her idea with the FFB leadership, they began crafting a legislative proposal and recruiting members of Congress. One lawmaker they made an impression on was Congressman Fred Upton, a Michigan Republican who sponsored the 21st Century Cures Act, legislation that speeds the process by which drugs and other medical products receive FDA approval. It was one of the last pieces of legislation Barack Obama signed into law. “The other day, I was at a major senior expo in Kalamazoo and there was a table set up for the visually disabled,” Upton told me. “We’d like to find a cure for this.”
Petrou hopes her proposal will have applications far beyond helping to cure blindness. “There are millions of Americans and their families suffering from disease and disability that scientists believe they can cure, treat, and prevent,” she said. “If the only thing that’s keeping disease and disability from being reversed is money, this bill is an experimental way to match the missing money at the valley of death.”
Some detractors of the bill argue that it does not address the real reason translational research has so much trouble finding funding. “There’s tons of capital chasing good interventions,” said Ezekiel Emanuel, vice provost for global initiatives at the University of Pennsylvania, where he also chairs the Department of Medical Ethics and Health Policy. “The problem is that the money is looking for high returns in diseases that will pay a lot of money.”
Blindness cures don’t have the same lucrative upside as treatments that not only have broad application but also require continual usage. Unlike erectile dysfunction, which requires a man to take a pill every time he wants to have sex, or an anxiety disorder, which requires a pill every day, a blindness cure will likely only require a brief, one-time treatment. That puts a limit on its profitability. (Or, as the comedian Chris Rock put it nearly twenty years ago, “There ain’t no money in the cure—the money’s in the medicine!”) The long-term horizon for any potential breakthrough is also unappealing to venture capitalists, who hunger for quick returns.
But Petrou understands all that. It’s why the Eye Bond is designed to target an entirely different pool of funding. “Who has long-term money?” said Basil, her husband, who helped her develop the idea. “The answer is insurance companies and pension funds.”
In other words, if Eye Bonds work, it will be by creating a new, low-risk investment product where one didn’t exist before—one that appeals to institutional investors looking for longer-term places to park their money, and drawn to the promise of a partial federal loan guarantee.
Petrou also said that the upside may be higher than people think, because visual disability is more widespread than many realize. That’s especially true after two wars in Afghanistan and Iraq; roughly 10 to 13 percent of combat injuries are now vision related. Meanwhile, with an aging population, macular degeneration is becoming more common.
It all adds up. According to the National Eye Institute, blindness and vision disorders cost the government $145 billion a year. By 2050, when the NIH expects blindness cases in the U.S. to have doubled from its current levels, that figure could reach $700 billion.
Petrou is playing a long game. It’s nearly impossible to pass such an ambitious plan through a divided Congress, where bold proposals generally die. And the bill’s champions on Capitol Hill recognize that its chances, at least this year, are slim at best. “Let’s face it,” Upton said. “We’re late in the year and there aren’t a lot of legislative days left.” But even if there is no movement soon, he said, that doesn’t mean it will fail. “We’ve certainly laid the foundation for it to be reintroduced next year.”
Petrou is aiming to lobby lawmakers more aggressively once the new Congress convenes in January. “If it succeeds, all the scientists in the field tell us that with a billion dollars they will cure blindness, in virtually all of its various forms, because the science is so far advanced,” she said. That’s only the beginning of her boundless optimism. She sees Eye Bonds as a first step toward building “a bio-bond market that expands to cancer or Alzheimer’s or Parkinson’s or any number of other diseases and disabilities.”
Until then, she will not be resting. Earlier this month, she was on the Metro when a mother approached her. “Can I ask you something?” Petrou recalled the mother saying. “My son is five. He’s going blind. Can he get a dog? I want him to be able to go to school.” I asked Petrou how often this happened. “All. The. Time,” she said. After another pause, she added, “With a guide dog, I can’t fake it anymore.”
One way she has dealt with her blindness is by pouring herself into her work. Too much rumination, when you’re trapped in a visionless body, can be dangerous. You have to keep moving. “There’s a big debate: Is it better to lose your sight all at once or over time?” she said. “Well, once you’ve seen the beauty of the world, you kind of miss it.”
She tries, as best she can, not to think about it too much. “There’s no choice,” she said. “I wish there were. The goal of Eye Bonds is for there to be one.”
After our conversation, Petrou had to leave for an appointment. She knows the office well, and needs little help getting to the conference room or the elevator or her assistant’s desk. All she needs is Zuni. Once beckoned, the dog would be by her side. After attaching a leash to Zuni’s harness, Petrou would give an instruction. Within minutes, they would be down the elevator and out the door, onto 19th Street.
It was a beautiful October afternoon. Washingtonians were out en masse for what might have been one of the last gorgeous fall days. Petrou would see none of it. Reflexively, she would just ask Zuni to lead her to the Metro. She still had work to do.