Investopedia: A Triple Play Of Biotech Disappointments Last Week

While disappointing clinical trial results are not only common, they're what most investors should ultimately expect (only about 10 to 15% of new drugs make it to market). Even so, last week saw three highly-anticipated biotech events all go against long investors. While the prospects for these three stories do vary quite a bit, at a minimum they ought to serve as a reminder that there are no sure things in this space.

Read more here:
http://www.investopedia.com/stock-analysis/2012/A-Triple-Play-Of-Biotech-Disappointments-Last-Week-ONTY-FOLD-HEB-GSK1228.aspx

Important note!
Investopedia's editors mistakenly altered the final paragraph to a significant extent. The original read:
 

Perhaps there are some CFS patients who could benefit from Ampligen. Unfortunately, I believe that the poor quality of the the trials run by Hemispherx (the resulting data) make it a moot point, and I believe this company and stock will continue to serve as clear warnings regarding biotechs that linger on for years at a time and cannot generate interest from proven biotech institutional investors. 

I have requested that the text be changed back to this correct/intended final paragraph.

 

Investopedia: The Top Biotech Performers of 2011

This has really been a year of the "haves" versus the "have nots" in biotechnology. Although a few dedicated biotech ETFs have done rather well and there have been some huge individual outperforming stocks, the sector as a whole has not necessarily been all that strong. Still, for those companies that could deliver encouraging data, particularly in the fields of hepatitis and cancer, the market was more than willing to reward the stocks with a higher valuation.


Hepatitis C - The Story of 2011
If any one theme should leap out at biotech investors in 2011, it is the explosion of interest in companies targeting hepatitis C. It is not as though hepatitis C is a new disease, but a host of companies have finally developed compounds that look to offer major improvements in disease management and quality of life for the millions of people with this condition.

Two of the top three performing biotechs with current market capitalizations above $250 million are hepatitis C plays. Pharmasset (Nasdaq:VRUS) has delivered the sort of year that biotech investors dream about for 2011, with the stock up nearly 500% in the last year. The stock was already doing incredibly well on the basis of very strong clinical data in PSI-7977 trials - data that basically showed 100% response in early administration of the drug. This stock found another level, though, when Gilead Sciences (Nasdaq:GILD) stepped up and offered to pay a considerable premium to acquire the company.


To read the full article, click here:
http://stocks.investopedia.com/stock-analysis/2011/The-Top-Biotech-Performers-Of-2011-INHX-MDVN-ONTY-ARIA1216.aspx

Investopedia: Should Biotech Investors Go Where Institutions Won't?

Some investors find safety in numbers, while others dream of discovering the next big thing long before the big institutions. When it comes to biotech investing, though, investors may want to consider just how wise it is to invest where the big institutions fear to tread. While nobody has a fail-safe method of identifying the best biotech stocks, it seems like investing in biotechs with minimal institutional support is a gamble that just isn't worth taking. 

Framing the Problem 

The biggest problem with biotech, and the biggest reason why there can be such outsized gains for investors in the industry, is that nobody truly knows if a drug will work (or be approvable) until very late in the process. Pick the right stock, Alexion (Nasdaq:ALXN) in the late 1990s, and the rewards can be enormous. Pick the wrong stock, say Essential Therapeutics or Shaman Pharmaceuticals, and it can result in a big (if not total) loss of capital. 

A few biotechs manage to muddle along, posting just enough promising early trial data to keep accessing the capital markets, but for the most part investing in biotechs with no approved drugs is a binary outcome. With that sort of expected outcome tree, it clearly makes sense for investors to use all resources at their disposal to winnow the list of credible investment candidates, and institutional support may be one metric to consider.

To read the full piece, please click the link to Investopedia:
http://stocks.investopedia.com/stock-analysis/2011/Should-Biotech-Investors-Go-Where-Institutions-Wont-ALXN-YMI-ZIOP-ONTY-MNKD-NEOP-MELA0707.aspx