As an investment advisor, I know the great potential of biotech. All you need to do is look at the multi-hundred billion dollar market capitalization of the Mercks and Pfizers to know that success in drug development holds the key to untold riches. But which companies will get there? How do you as an investor approach this very complex field?
George Wolff's Biotech Investor's Bible thoughtfully lays out the key issues an investor must be familiar with. Product pipelines, alliances with major drug companies, strategies companies use to speed up FDA trials, valuation techniques, and a myriad of other important issues are thoroughly explained by Wolff in plain English.
A huge run-up in biotech stock prices in early 2000 was sparked by the expectation that the human genome would be mapped. The bubble burst in March 2000, leaving many of the hottest stocks broken and battered. The theoretical excitement however, has given way now to a market that is focused on the companies that have an aggregate of several hundred drugs in various stages of FDA trials. Many of these stocks have recovered and in some cases gone on to new highs. Wolff provides not only the overview of the industry you need, but also the means to determine which individual companies show the greatest promise.
Without this book and its comprehensive explanation of biotech investing, I would never attempt to participate in this market. But you should ask yourself: can you afford not to? With the tech sector in a shambles, with the stock market stagnating in general, what will bring on the next high-growth trend? A strong case for biotech is made by the author. The fast pace of research, the growing base of scientific knowledge in the field, and the several current winners like Amgen which sports a $65 billion market capitalization, all clearly point to the future development of many new, effective treatments which will be brought forth at an ever-increasing rate for decades to come. I for one plan to stay informed and involved with my investment dollars.
You truly would omit this book from your reading list at your own financial peril.
My primary complaint is that the first few chapters were practically devoid of content, offering only hype on how great biotech is. The comparison of biotechnology with the PC industry was also a bit of meaningless hype.
On the positive side, after the reader wades through or skips the first three chapters (unfortunately, I read them), there are numerous valuable bits of information and insight. Particularly valuable are the author's idea of categorizing biotech companies by market capitalization (share price times shares outstanding). This is a useful way of measuring how the market evaluates a company that has no current earnings. Chapters 10 through 15 are a veritable encyclopedia of the different approaches taken by biotech companies, from anti-sense to vaccines. The leading companies in each field are introduced and their prospects briefly reviewed. These chapters were readily useful to the investor and led me to make (so far) successful investments in PDLI and QLTI.
The book is now silghtly dated, having been published in 2001. However, this can be said of any two year old investment book. The reader should certainly do some careful analysis of the current state of any candidate for investment. I actually found the slightly dated nature useful in that it allowed my to judge which companies still looked like winners two years later and which did not.
Advice: Buy the book, skip the first three chapters, and read the rest. Also buy and read Investing in Biotech by David Harper which covers much of the same material in a more orderly manner. (More detail is available in my review of that book.)