Investment ideas don't grow on trees. But for biotech investors, they do grow in laboratories. Here are three investment ideas that biotech investors should consider.
Bet on a billionaire
I'm usually inclined to bet on underlying technology rather than the management team, but there are some exceptions.
George Scangos has turned around Biogen Idec (NASDAQ:BIIB). Shares have more than quadrupled since he took the helm in the middle of 2010. Focusing the company's pipeline by getting rid of fringe products was clearly a good move. Fellow Fool Sean Williams drafted him to head his fantasy biotech company, with which I completely concur.
MannKind (NASDAQ:56400P706) also has a pretty successful CEO in Al Mann, who became a billionaire founding multiple companies and selling them. For this investment idea, though, we're more interested in Mann's pocketbook than his wheeling and dealing abilities.
The company is developing a small handheld inhaled insulin product called Afrezza. The drug device has run into multiple roadblocks along the way but seems to be on its final approach toward landing on the market.
Whether Afrezza will be a commercial success depends a lot on how hard the product is marketed by MannKind or its marketing partner -- if it lands one. Diabetics are used to injecting insulin; it's going to take some serious promotion to turn around the mind-set of doctors and patients. Fortunately, Mann has the money to invest.
This is Mann's baby. It's his investment idea. But you're welcome to tag along.
Multiple shots on goal
Isis Pharmaceuticals (NASDAQ:IONS) has more than 30 drugs in development. Thirty! The thesis for this investment idea isn't all that complex: With that many drugs, something's got to work.
Isis' pipeline is built on an antisense technology. The drugs knock down the expression of disease-causing proteins by promoting the degradation of mRNA that encode for the proteins.
The technology has taken awhile to develop; Isis had to figure out a way to keep the oligonucleotides that bind to mRNA from getting degraded before they could do their job. But it's finally succeeded with Kynamro, a cholesterol-lowering drug it developed with Sanofi (NASDAQ:SNY).
Partners like this investment idea
When Regulus Therapeutics (NASDAQ:RGLS) went public last year, investors weren't the only ones buying the share offering; Regulus' partners and founders clearly thought it was a good investment idea, because they bought more shares. Lots of them. AstraZeneca, Biogen Idec, Sanofi, GlaxoSmithKline and Isis combined to purchase more than 70% of the shares that raised nearly $81 million for the biotech.
AstraZeneca, Biogen, Sanofi and Galxo are all working with Regulus to develop drugs targeting microRNAs. The technology, which was originally a joint venture between Isis and Alnylam Pharmaceuticals, is still in its infancy -- Regulus doesn't have any drugs in the clinic -- but clearly its partners think it's a pretty good investment idea.