Biotech crash last week shows that Wall Street knows these retail investors are hoping to score a lottery ticket in a sea of these bio start-ups. I have seen some ppl put over 50% of their net worth trying to ride biotechs. We are talking about hundreds of thousands of dollars into speculative companies that don't have any products out or generate revenue....All they generate are hope....hope that they score a blockbuster drug. the reality is, less than 20% will be revolutionary enough to be both effective, safe and efficacious.
All you biotech investors must understand even if a company score big on a drug, you need a big pharma to buy them. If these big pharma don't see a need to buy them, these companies will not be able to market and sell their drug no matter how great it may be.
In case you are not aware, Obamacare is here to stay....Repubs tried to kill it with debt default/gov shutdown, but they lost. What does it mean for biotechs? Less reimbursements for novel drugs by insurance companies, more cost savings on generics....bottom line, big pharma's profit margins will be cut....so add another incentive for big pharma to not spend lavishly on biotechs that had yet to even get FDA approval.
My advice is: you want to dream being rich by hitting it big on a biotech....things just got alot tougher. Don't put too much chips into one sector. That is not investing, it's not diversification, it's gambling.
That's why you should only invest in a very "important" needed new drug-- such as Z160..and be very cautious.
Savient is a perfect nightmare example. Had a great gout drug, FDA approved, no buyout, but couldn't get good sales. There isn't really a need for an expensive new gout drug, even if it is best in class..... they just went bankrupt..