Off topic: any biotech analysts here?

[prunes]

Even though this is a value oriented board, there are a number of good analysts here. I figure there might be a chance that at least one or two of you cover biotech.

 

I'm following a small cap biotech company that recently met with the FDA (type c meeting). I am interested in getting a copy of the meeting minutes. Management has them but hasn't made them public. I filed a FOIA request but it was denied on account of trade secrets and/or confidential information. I would think though that the FDA could at least redact the sensitive info instead of outright rejecting the request.

 

I'm just wondering if I'm totally wasting my time here and would love to talk to someone who has more experience.

 

[jhcap]

I did research in the biotech field for eight years and I thought my experience would give me an edge in investing in the sector. While I had a few successes where I doubled or tripled my money, I also had a number of failures where I lost the majority of my investment. I came to two conclusions that have convinced me to stay away from biotech.

 

1) Phase 1 and 2 trials are generally too small to be statistically accurate. Many times drug trials show great promise in the first two phases only to fail once a larger population is tested.

 

2) The FDA is completely unpredictable and sometimes makes decisions that are contrary to the scientific evidence, probably for political reasons.

 

I would still consider investing in a biotech company, but only from a value approach, and not by betting on a new drug or technology.

[LC]

What are your thoughts on a company like valeant, which is more like a royalty stream on already developed drugs?

[jhcap]

What are your thoughts on a company like valeant, which is more like a royalty stream on already developed drugs?

 

I think a company that is investing in already developed and patented drugs can be a great investment. Drug patents can be one of the more robust moats out there. Frankly, I haven't dug into Valeant at all, but a cursory look tells me they are taking on a lot of debt to fuel their growth, which is something I am not usually comfortable with.

 

On another note, it would seem even a great value investor can get sucked into the promise of new blockbuster drugs coming down the pipeline:

 

http://www.valuewalk.com/2014/04/klarman-closes-position-on-enzon/

[bz1516]

 

I would still consider investing in a biotech company, but only from a value approach, and not by betting on a new drug or technology.

 

I have positions in two small companies that avoid binary risk.  One is BioSyent, RX (TSX.V) and the other is Knight Therapeutics, GUD (TSX.V).  RX completely avoids drug trial risk by in-licensing and GUD does in-licensing and Phase 2 and 3 combination in-licensing and financing deals which will spread the risk quite adequately imo.  Knights founder has a good track record having founded Paladin Labs.