Biotech Investing

The business of curing diseases can be a lucrative one, and investors will jump on the bandwagon for any stock that shows the promise of a big breakthrough. Biotech is in its early growth phase. In a few short years, twentieth-century health care methodologies will seem medieval and archaic. BY the middle of the current century, today’s medicine, which attempts to a weapon that works against a given health treat, will be largely replaced by genetic approaches that reveal the actual sources and biomedical pathways of disease. The result is that, doctors will work for genetic prevention of a disease rather than treat the disease itself.

It is difficult to determine who will win because scientific discovery, application of new knowledge to practical problems, and timely execution of business plans are still at an immature phase. Despite all the sophisticated labs, advanced procedures, and highly educated scientists, the greatest discoveries are likely to come from out of nowhere, and the best treatment of aging or cancer may be discovered by pure chance.

As we all know, the best technology doesn’t always win; dedicated leaders with a vision, commitment, and a strong management teams often did. And in the early days of any revolution, it is harder to spot that great technology.

However we can always improve the odds. Analyzing a Biotech company is different from analyzing a common stock. All new drugs must go through a lengthy testing and approval process supervised by the Food and Drug Administration (FDA). Each drug must complete three sets of clinical trials called Phase I, Phase II, and Phase III, typically running 18 months, two years, and three to four years, respectively. Products successfully completing the clinical trials are submitted to the FDA for marketing approval, a process usually taking one or two years to complete.

Given these timeframes, it

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