(FORTUNE Magazine) – Oracle founder and CEO Larry Ellison is as well known for his pursuit of the good life as he is for his business accomplishments. Yacht racer, jet pilot, epicure--he's considered the playboy of the wired world. But all play and no serious work would make Larry a pretty dull guy. And believe it or not, he does have his serious side, even beyond running one of the world's largest software companies and chasing Bill Gates for the title of World's Richest Man.

Ellison's primary side interest actually is the same as Gates': biotechnology. Like Gates, Ellison has endowed a philanthropic institution that, among other things, provides vaccines to combat infectious diseases in the Third World. Called the Ellison Medical Foundation, it also funds research into finding cures for diseases of the elderly.

And like Gates, Ellison is a speculative investor in biotechnology. He owns about 70% of Quark Biotech, an Israeli company employing more than 100 Ph.D.s that has the humble goal of curing cancer, although it is commercializing new kinds of gene diagnostics as well.

Ellison recently sat down with FORTUNE's Brent Schlender to talk about his forays into biotech. He was brash and boastful as always, but clearly proud that the hundreds of millions he has provided to his foundation and startup might actually give something back.

How did you get interested in biotech?

I've been interested since I was a kid. Back then that's not what they called it. It wasn't thought of as a technology. In fact, I'd argue that biology was closer to cooking than it was to physics in terms of being a science--it was not very well quantified or well understood. Today biotech is flowering with knowledge about how to manipulate the gene and modify a cell to express proteins that are useful. There's just a much better fundamental understanding of how life works.

And this new understanding that enables us to develop all these wonderful interventions, be they medicines or vaccines or what have you, reminds me of what it must have been like in the 1920s or '30s in physics. These technologies are going to change our world. So from an intellectual standpoint, they're absolutely fascinating. I also guess I'm a groupie. I'm not into rock stars or movie stars, but I love hanging around these scientists because they're so stimulating and funny.

You've got your hands pretty full with Oracle. What prompted you to begin to put real money and time into biotech?

I think life is the only miracle, and understanding how it works is the best intellectual mission one could have. Don't get me wrong: The Internet's an extraordinarily important technology, as important as telephony. But the Internet's nothing compared to the fundamental understandings that we learned about physics which yielded the atomic bomb, among other things. And really, you ain't seen nothing yet. Biotechnology is going to fundamentally change the world even more so.

One of the things it's done already is dramatically extend life spans. Longer life creates big implications for our society. The economic climate in our country will fundamentally change as people age, and that will create political and social change we're only now becoming aware of. It's great news that we're going to live longer. But there's also some bad news: The Social Security system is bankrupt. There is a tremendous tension in our society now between whether we should use our money to take care of retired people or to educate kids. The kids don't vote, so you know who wins. It's all very interesting. And it's going to get worse. The baby-boomer generation, of which I'm a member, is aging, and as we get to the end of that teeter-totter we can tilt the entire economy if we're not careful. That's why one of the other philanthropic things I'm doing is talking to Harvard and Stanford and MIT about creating a research program that looks at how technology impacts economics, and in turn how economics impacts the way we govern ourselves.

But living longer delivers a double whammy beyond the Social Security problem. The fact is that if you live longer, you're bound to get one of the diseases of old age as your body breaks down. But because health care has improved, these diseases no longer kill you right away. That's good, but the cost of health care grows dramatically higher the older you get. People don't want to spend these extra years in the hospital being cared for. They'd rather be out playing golf or sitting on their lawn reading their favorite book.

People are living longer but suffering more. So what we really need is less care and more cure. I know, that's kind of a cute and trite-sounding line. But think about it. Cures are not only vastly more humane, they're also much more economical. It's incredibly costly to care for someone with Parkinson's or Alzheimer's. Unless we cure some of these diseases of aging, they too will become economic time bombs. So that's the source of this focus on aging in our medical foundation. Some crackpot articles have said I'm looking for the fountain of youth, but that's not it at all.

You sound as if you're saying that we've got our priorities all backwards.

For every $100 we spend in care for the aged, we spend less than $1 in research trying to find cures. The NIH historically has not put that much into tackling diseases of aging. That's irrational and not economical.

There's huge amounts of money for research on the AIDS epidemic, which is a great thing. Believe me, I'm all for doing everything we can. This is a very dangerous plague we're dealing with. But nearly everyone gets old and is going to suffer. Cancer is to some degree a disease of aging. The likelihood of getting cancer is far greater as you get older than when you're a kid. And if we don't tackle some of these diseases and cure them, we will bankrupt our society.

It hits all of us close to home. My mother died of leukemia. My brother-in-law, an appellate court judge, got Parkinson's. It's awful to watch this extraordinary mind just wither away. This person just disappears before your very eyes while his body is still alive. So there are humanitarian reasons for seeking cures too.

Why can't market forces seem to deal with the problem more rationally? Is it because they've been so distorted by government intervention or regulation, or what?

I think the reason market forces don't work well in biology has to do with timing. If we have a very clever idea at Quark--the biotech startup I'm backing--it would take us ten years to commercialize it. I'm used to working in the software industry, and when someone has a clever idea, it takes two years to get to market. To me, and to the capital markets, that's a long and frustrating time. But in molecular biology it takes a full decade.

And you never know when there's going to be some adverse effect until you test it on just about everyone. Let's say there's a new vaccine for AIDS, and for every million people who are vaccinated, one person catches the disease. One in a million. Yet in the U.S. the potential legal liability for that one person can wreck the profitability of the vaccine. We don't outlaw cars even though we know people sometimes die when driving them. But we are not willing to accept the fact that sometimes there's going to be an adverse effect by one of these drugs. You've got to bat a thousand.

That's because the FDA is set up to avoid any errors of commission so it can feel perfectly absolved of every responsibility. And so they delay and delay and delay. There are all sorts of contradictions. Here's my favorite: When your mother is dying of cancer, she's in horrible pain, and the FDA is willing to fill her with Demerol, which is basically synthetic heroin, but she can't smoke pot. Or eat it. I mean, talk about making a crass political decision on a humanitarian issue. It's appalling.

Another goal of your foundation is to battle infectious diseases in the Third World. The Bill and Melinda Gates Foundation has garnered lots of attention tackling the same problem. Is this a case of Larry's "keeping up with the Gateses"?

No, not at all. For one thing, we don't have a single PR person associated with our medical foundation. We put in a quarter of a billion dollars to fight infectious diseases in Africa like malaria and tuberculosis, and we didn't put out a single press release. Every time Bill puts in $100 million his press team gets right on it.

But be that as it may, it's wonderful that he is looking at these problems too. It's also great that the U.S. and NIH are investing more heavily in diseases of the Third World. You have to remember that the whole point of investing in Third World diseases is that the big pharmaceuticals companies are not going to do that themselves. There's no chance of ever achieving profitability on these drugs, because the people who suffer from these diseases can't pay for the medicine to prevent them or cure them. So that's why it's a wonderful area for lots of foundations to pursue.

You've also invested in a biotechnology startup company in Israel called Quark.

Yes, but cancer research is a different matter. Quark is a "for-profit" pharmaceuticals company in Israel whose goal is to pursue cancer research, because cancer is a disease for which, if you could find a treatment, there are many people who can afford to actually pay for it. The scientists working in that area really want to work in the for-profit sector, not in the academic sector or for the sake of pure art. So when you try to decide how you attack any of these diseases, you have to recruit the right scientists and set up the right institutions to work on the problem. My personal opinion is that I don't think the world much cares who cures cancer--some clever university researcher or some whiz at Quark--as long as it's cured.

Quark is taking a couple of different approaches to finding better therapies and perhaps a cure for cancer. Can you describe them?

One area of research is the quick screening of people's genetic makeup to determine if there are certain therapies that can or can't be used. A good example is finding those who are vulnerable to radiation. Radiation is commonly prescribed as a diagnostic, but there are significant numbers of people who really can't endure it. You don't want to find that out after the fact.

If you can do it for radiation, we think you can do it for vulnerability to almost any kind of potential pharmaceutical. The trick is to figure out what is it about you that makes you vulnerable to this pharmaceutical. We'll find you, screen you out, and give you other pharmaceuticals. It's drug personalization. It's sort of like how Amazon.com can look at all the books you've previously read to recommend a new one for you. We hope to be able to look at all your genes to recommend the right drug for you as well as what ones to avoid.

But the greatest benefit is that quick screening could enable the approval of other existing pharmaceuticals that didn't make it through clinical trials because of potential side effects for certain people. It's a potentially monumental breakthrough, because it enables not just one new treatment but perhaps thousands of new treatments that previously couldn't be approved.

What any cancer therapy is trying to do is to kill the cancer cells, either with radiation or with chemotherapy. With any of these therapies, however, there's also a tremendous amount of what you would call, in military terms, collateral damage to healthy cells. But within each cell is a gene called P53, whose purpose is to trigger the self-destruction of the cell if something goes wrong. In cancerous cells the P53 cell for some reason doesn't do its job. Its effect is suppressed.

Quark is developing a compound that basically turns off the P53 gene in healthy cells. That means you can eliminate a lot of the collateral damage when you apply radiation therapy or chemotherapy. You can even apply stronger doses--we tested ten times what usually are lethal doses of radiation--and the healthy cells, which usually self-destruct, survive.

So with the Quark compound, which flips off the P53 gene for a couple of hours, death takes a holiday. Not only does it get rid of the side effects, it allows you to dramatically increase the dosage and get much more aggressive going after that cancer. So it makes every existing cancer therapy more effective. It's a very big deal.

I'm curious: Is there a selfish motive for your investment in Quark? In other words, have you yourself had a brush with cancer or any illnesses that made you more aware of your own mortality?

Other than crashing a lot, no. I haven't been ill. I just crash into things and come back all broken up. I've broken my neck in surfing accidents. I've broken my arm in 28 places in a biking accident. That was while I was rehabing from breaking my neck in the surfing accident. So I've done those things, but I really have been healthy otherwise, knock on--is there any wood around here? No, not in this office.

But someone asked me once how much I would pay to cure cancer if I could. And I replied, "Everything I've got." What do you think is cooler: being the richest guy on earth or helping find the cure for cancer? What would you want to do? That's a pretty easy question. Let me nail the big C.