The good news is that biotech investors who don't meet the above criteria can often see solid returns. I think Sarepta Therapeutics (NASDAQ: SRPT ) offers a nice opportunity right now.
First, investors should know what they don't know concerning Sarepta. For example, no one knows for sure yet whether the company's Duchenne musculary dystrophy drug, eteplirsen, will gain accelerated approval by the FDA.
Second, investors should limit how many shares are bought. Sarepta's stock could take a beating if accelerated approval doesn't happen. There are plenty of other risks that also make it a prudent decision to control the size of any stock purchase.
Finally, be willing to wait even if accelerated approval isn't granted. Eteplirsen has shown tremendous promise thus far in clinical studies. The long-term prospects for the drug and for Sarepta should be strong.