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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

In the Pipeline

« Can You Patent A Natural Product? Prepare For a Different Answer | Main | A Call For Better Mouse Studies »

April 8, 2014

Biotech Boom, Biotech Bust?

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Posted by Derek

Here's a good one by Matthew Herper on "Three Misplaced Assumptions That Could End the Biotech Boom". Given the way the biotech stock index has been performing lately, with a horrendous March and April that's taken it into negative territory for the year to date, something definitely seems to be causing a change of mind.

I'll let you see what Herper's three assumptions are, but I can tell you already that they sound valid to me. I think that his points are particularly relevant to investors who may have been jumping on the stocks in the area without having a clear idea of what the industry is really like. As he says, ". . .investors should avoid thinking that the drug business has undergone a fundamental change in the past few years. It hasn’t." It's the same fun-filled thrill ride as ever!

Comments (2) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. rodentrancher on April 8, 2014 9:55 AM writes...

Off topic, but wondered if you had caught this on NPR:

"Most experimental drugs fail before they make it through all the tests required to figure out if they actually work and if they're safe. But some drugs get fairly far down that road, at the cost of hundreds of millions of dollars, based on poorly conducted studies at the outset"

http://www.npr.org/blogs/health/2014/04/08/298335701/how-mouse-studies-lead-medical-research-down-dead-ends

In spite of the title, it's not a criticism of mouse studies per se, but rather is saying that many such studies are poorly designed and controlled. NPR stated that rodent studies are often not blinded in the way clinical studies are, allowing more possibility for researchers to unconsciously be biased in assessing outcomes.

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2. annon four on April 8, 2014 11:03 AM writes...

1: Or that rodents are poor models for humans in many disease areas.

On Derek's post: Biotechs are no different than any other sector that can look attractive to investors who don't understand the full risk involved. Companies with one new, unique, breakthrough product can become a very "hot" stock, which can influence the stock price of other similar companies too, even those that haven't yet had any approvals. Like tech in the late '90s, or tulips in Holland, the valuations become unrealistic and unsustainable. A key give away to an overheated sector is when there's a rush for doing IPOs, to grab an overvaluation before reality kicks in again. It's probably still overvalued, so any investing should be done with great caution, particularly in any more new IPOs. But with Biotechs, there will be real winners over time, companies that make new, innovative drugs that transform human health, and those will certainly legitimately gain in value by leaps & bounds. With all the risks inherent in new drug R&D, trying to select the eventual winners from all the others can still be an alchemist's stew.

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