Biotech Tweet of the Week: Do Your Due Diligence

Our tweet of the week comes from Mandy Jackson quoting Steve Burrill at a Southern California biotech industry conference, where the venture-capital guru said that his fund looked at 150 companies last year for every one they funded.

While investors in public biotechs can't be that picky, senior biotech specialist Brian Orelli and health-care analyst David Williamson make a simple point in the following video: Don't buy first one you see.

There are a couple of strategies that investors can take to help separate the cream, such as looking at all the companies in the same therapeutic area -- for obesity-drug makers that would be Orexigen (NASDAQ: OREX  ) , Arena Pharmaceuticals (NASDAQ: ARNA  ) , and VIVUS (NASDAQ: VVUS  ) -- and pick the best one or split your investment into multiple biotechs treating a disease if it isn't clear which one will come out on top.

You can also look at companies of the same size, choosing the best large-cap biotech for instance. Or you might look at companies with upcoming binary events and pick the one that provides the best risk-reward ratio.

In the tweet, Burrill also says that bigger Series A rounds are going to fewer start-ups. On one hand, that might be a good thing for investors in public companies: If the more successful companies are getting funded well, we could see higher-quality IPOs on average. On the other hand, these private companies compete with public companies that investors may own. For instance, Juno Therapeutics snagged a whopping $176 million in its Series A round to develop its immunotherapy drugs designed to make the patient's killer T cells attack the cancer. The funding will make it a formidable competitor to Novartis (NYSE: NVS  ) , which is working on a similar platform.

This guy knows how to do due dilagence
Warren Buffett is so confident in the prospects for one of his recent purchases that he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share for its industry. Just click here to discover more about this industry-leading stock, and join Buffett in his quest for a veritable landslide of profits!


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2944099, ~/Articles/ArticleHandler.aspx, 10/24/2014 7:16:29 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement