Forum Archive Index - May 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Well, no-one has taken up the challenge to provide any details on a 
successful biotech investment strategy.

I'd really like to know if even the wise hands like Gerry have made any 
money in their total experience of investing in Biotech.

Given the paucity of information to the contrary I would like to put 
forward a theory.  Long term, it is impossible as an investor to make 
money by investing in biotech.

The problem as I see it is that investing in biotech is really a zero sum 
game.   There are no dividends paid and usually no earnings either.  
Because there are tradings costs in buying and selling shares this 
means that in the long run all investors will lose.   Biotech investors 
buy into companies at extraordinarily high P/E ratios.  Effectively this 
means you require your biotech company to produce a world beater 
just for the investor to break even.   The fact that the Genesis 
Research float was not underwritten should have set off a few warning 
bells in the mindds of potential investors.  Enormous costs need to be 
met just to bring a new drug to the market, and years of testing a  
required to get an idea to become a commercial product.

Even Wrightson's possible coup of buying into Genesis Research at a 
price less than the cash on hand within the Genesis company may not 
look so smart in a couple of years time.    Without a commercially 
viable product this investment will continue to burn cash, even though 
this cash was bought cheaply.

Anyone care to refute my argument?    I think the best way to make 
money out of biotech is to be a smart biochemist  that works for one of 
these companies!

SNOOPY


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