Biotech investing, by necessity, demands a certain amount of optimism. You must be able to see beyond the prodigious odds of failure and take the plunge with companies that are statistically far more likely to fail than they are to succeed.

That said, there's optimism, and then there's blind hope.

Investors hoping for great news from Corgentech's (NASDAQ:CGTK) phase 3 study of edifoligide (E2F Decoy) in coronary artery bypass graft (CABG) surgery might be accused of the latter. That is particularly true given the earlier failure of the same drug in a phase 3 study of a closely-related procedure -- peripheral bypass graft surgery.

As the results seen in December presaged, the CABG trial, too, was a failure. Although more than 3,000 patients were enrolled in the phase 3 study, shareholders still heard those words that send a chill into every biotech investor -- "failed to meet the trial's primary and secondary endpoints."

At least Corgentech investors can't say that they weren't warned -- in December, no less. When a drug fails a trial, it's pretty common for trials in similar conditions to fail as well.

What's more, the history of the condition in question made this a lower-probability drug candidate. Certain diseases make up what I call a "biotech's graveyard" -- diseases that for one reason or another are just really tricky to solve. Diseases and conditions like sepsis, Alzheimer's, stroke, lupus, and CABG surgery have all proved to be extremely tricky for pharmaceutical development.

Not surprisingly, in the wake of the trial failure, Corgentech's partner Bristol-Myers Squibb (NYSE:BMY) decided to cut bait and terminated the entire collaboration for E2F Decoy development.

Whither goest these two erstwhile partners?

For Bristol-Myers, it's pretty much business as usual. Although the company had partnered with Corgentech and paid for the development of edifoligide, I highly doubt that Bristol-Myers was really expecting great things from this drug. It was never a centerpiece of its research efforts and seemed to this Fool more like something that would be "nice to have," but not essential to its future. In other words, this was a low-risk opportunity to obtain a high-potential drug.

For Corgentech, matters are certainly more serious. This failure, combined with the company's decision to end all development on E2F Decoy, leaves the company with no drugs presently in trials. While the company hopes to begin studies on NFkB Decoy for eczema shortly, and put another drug into trials later in the year, the fact remains that it's basically "back to the drawing board" for this biotech.

For the small solace it may offer, Corgentech does still have more than $4 a share in cash. While new clinical trials will certainly eat that up, it does give this company time to get some new drug candidates together and perhaps find a new development partner.

In the grand scheme of things, there's not much new here -- the large, well-stocked pharmaceutical goes on its way (with nary a drop in the stock to show for it), and the biotech stock gets pummeled. And that's the way it should be -- if you want the possibility of a big pop, you have to go with biotechs and take the risk of failure. If slow and steady is more your thing, then pharmaceutical companies are usually the better bet.

For more Foolishness in the world of biotechnology, please check out these other articles:

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Into more dynamic ideas? A free trial toMotley Fool Rule Breakersmay be just the ticket.Fool contributorStephen Simpsonhas no financial interest in any stocks mentioned (that means he's neither long, nor short the shares).