Now here's a refreshing change. Two pharmaceutical companies presented data at scientific meetings over the weekend about drugs that failed their clinical trials. They even put out press releases to announce the presentations. Yet I'd call this news anything but a reason to sell your shares.
Investors usually hear little about failed drugs. They sometimes just die a quiet death, without investors ever realizing they've been removed from the pipeline. Getting a full scientific presentation about how and why these compounds failed is just a bonus.
At the American College of Cardiology meeting this weekend, Schering-Plough
But -- and this is important -- the already approved Zyprexa didn't beat the placebo, either. In this case, it's likely that the placebo group is the outlier. Better-than-expected performance from placebo groups is unfortunately fairly common in drugs that treat indications such as pain, depression, and schizophrenia. Eli Lilly will be running another phase 2 trial to confirm whether this was just a fluke.
The more information we investors can get, the better. In that spirit, I applaud both companies for coming clean about their failures. Here's hoping we can look forward to more examples of this sort of honesty.
Further potentially failure-filled Foolishness:
Johnson & Johnson is a Motley Fool Income Investor selection. To see how dividend-paying stocks can offer both secure income and the opportunity for growth, take a free look at this newsletter with a 30-day free trial.