Disappointment is a fact of life with biotech investment. While clearly some companies do go on to become Amgen (AMGN) or Gilead (GILD), the roughly 85% failure rate for new experimental drugs means that most companies will eventually fail … or do little more than struggle along from disappointment to disappointment while using even the slightest glimmers of hope to shake down shareholders for more capital.
Despite that somewhat morbid lead-in, the reality is that some biotechs do recover after periods of disappointment and malaise. Current successes like Alexion (ALXN) and Celgene (CELG) had their trials by fire and came back to handsomely reward those who took a chance on them during the dark days. In fact, history has shown that sometimes the best time to buy is after the initial enthusiasm has been wrung out of a stock and management has earned some credit hours from the school of hard knocks.
To read the full piece at Seeking Alpha, please click here:
http://seekingalpha.com/article/255516-battered-but-unbroken-biotechs?source=mc_all
Please note: I mistakenly listed "Glaxo" as Nektar's partner on the inhaled pneumonia drug, when it should be (is) Bayer. That correction should get made promptly...
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