Best biotech stock can give more than 500% gain with in a short period. When we say Biotech Stocks most of you should be remembering the recent gains made some Biotech companies like HGSI and CTIC. Few months back CTIC was going below .05 cents and now it is riding at about $1.50.
The Buzz Word “Biotech”
What are Biotech firms? Biotech firms primarily use genetic engineering. Most of these companies are started with some solid idea to come up with some winning product. Examples are cure for Cancer, AIDS etc… There are different points to analyze a biotech company. This is different from analyzing common stock like Microsoft or GE.
Every Biotech or pharmacy company has to pass many hurdles before they come up with a successful product in the market. If you take the history of Biotech companies, most of them had been at the brink of Bankruptcy at one point of their life. This is primarily due to the lack of income during the research and development stage of the product. It takes long to successfully develop, get approved by FDA and successfully market the product.
Food and Drug Administration (FDA).
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’s best to focus on companies with at least two products in phase III trails or awaiting final FDA approval. More is better, and you want companies with a steady stream of products in all testing stages.
Burning Cash
Most biotech firms have few, if any, products already on the market generating income. Companies without income to cover expenses are said to be “burning cash.” Analysts often compare a company’s assets to its “burn rate” to determine how long the company can survive before running out of cash. They say it’s better to stick with companies with a least two years supply of cash on hand.
Partners
Most biotech products sound promising. However, it’s difficult to know if there are better competing products in the pipeline and the size of the potential market even if the product is successful. Small biotech companies usually form partnerships with large pharmaceutical firms to market their products. The existence of these partnerships means these in-the-know companies think highly enough of the product’s prospects to take on the marketing.
A last point to mention is beware of companies which are family business. I have to add some negative marks for them!
{ 7 comments… read them below or add one }
WHEN WOULD YOU SHORT HGSI THANKS SPUDS……
I agree that small bio’s do not trade on fundies but a fair share of them do trade on technicals (charts)also you don’t need
FDA approval for a stock to soar, it just takes good news, PR’s and meetin endpoints in trials. If you wait the the FDA approval its too late.Case in point HGSI, DNDN has no product other than the pending FDA approval of provenge and both stocks went to the moon on positive trial results. I know HGSI has one already on the market but it went up over 350% on the trial news and DNDN was so manipulated it was a crime what happened with that stock but still no approval
and with FDA pending went from 4 to 30 back to 3 to 7 than to 27 on final results. I not disagreeing with you just pointing out that there are other ways a small bio can fly. You also need a good IR team.
Look at HEB will they ver get their day in the sun and AGEN, I’ve been in and out og AGEN 3 times with a double each time and the stock goes from 1 to 2+ and back to 1. M point is no fundies just news move bio’s. JMO
correction I should have proof read my comment for
spelling and 4-30 was meant to be 4-20 when commenting on DNDN. Which
Mike Milkin ? should have gone back to prison for his role in the fiasco of DNDN. JMO
pretty good
Oncolytics (onc.to & oncy (nasdaq) will probably the next one to make the market. Its product is reolysin and this natural virus is very promising. Disclosure: I own close to 20,000 shares.
Any feedback from Jazz is it a keeper?
I wonder if someone in this forum knows an ETF dedicated exclusively to biotech in the way to approval by FDA, etc.
Disclosure, I have 1000 DNDN and several thousand ONCY. also pphm, avnr , (some really goods, other a disaster BUT!)