Do #biotech stocks over-react to bad news? A study found that on average, a biotech stock returns 72% after reporting negative clinical data after 12 months
An interesting find but likely a dataset quirk
What do you think?
#learnbiotechinvesting #investing #BiotechPrometheus
Investors should be aware of "p-hacking" strategies used in data analysis: For biotech, I have come across #s 3, 6, 8-11 too often
Hard to know without raw data but be prepared to ask & investigate where possible!
#learnbiotechinvesting #biotechinvesting #BiotechPrometheus
Pharma has varying levels of success developing drugs. That's a boon for biotech
Here are the biopharma companies ranked by likelihood of first approval (LoA%) from 2006-2022
$AMGN, $NVO, #Eisai top the list
$GSK, #Astellas, $ABBV are at the bottom
#learnbiotechinvesting #BiotechPrometheus
Here's an annotated #KaplanMeier curve to help investors know what information is being presented.
It covers #mPFS, 12 & 24-month survival, #HazardRatio, #atRisk.
These metrics give different views of a drug.
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Biotech investors take note: Blockbuster drugs drive #pharma profitability
From 2011-2020, all blockbuster were profitable but no low selling drugs were
No immunology blockbusters in the time frame but there are now
#learnbiotechinvesting #biotech #investing #BiotechPrometheus
Investors should beware of drug revenue forecasts. They're often wildly off, either too high or too low
That will impact your analysis
This is from 2013. If there's more recent data, please cite the source below
#learnbiotechinvesting #biotech #investing #BiotechPrometheus
Investors should take an unbiased view of data and not only listen to management. Ask yourself: Is the drug doing what it's supposed to do?
Look for: getting to right tissue, target engagement, proof of mechanism, and proof of concept
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Investors will often see ORR quoted or displayed for oncology clinical trial results for solid tumors
Here's what the CRs/PRs/SDs mean at a high level
These are assessed on scans
I'm using RECIST v1.1 definitions
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How much time do FDA expedited designations save?
Accelerated approval and Breakthrough status save a statistically significant amount of time. But Fast track does not
Investors should keep this in mind
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Investors should know WHAT will move a stock and WHEN, especially in biotech with the outsized moves. Build your catalyst calendar ahead of time.
You won't have time to thoughtfully analyze the data when it hits
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Incorporating Probability of Success (PoS) is a unique aspect of #biotech valuation investors must be aware of.
It tries to factor development risk into revenue and cost assumptions.
Here is a table of PoS values:
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A reason to love #biotech: a company approaching the end (low stock price; near "death") can generate >20x return in a few, or even 1 year!
Though these deals are few & far between, here are some examples:
Who will be next?
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Happy New Year! Investors will see lots of references to the JP Morgan Healthcare conference, JPM, #JPM2026, etc
But what is it? Here's a quick overview for those new to the field
There will be lots of news to sift through. Enjoy!
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The context of the data matter. How does it stack up against the competition? Is there other competition?
This framework will help investors organise their thoughts
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Investors should understand the #FDA regulatory process well. Here is a quick summary
At each step investors should ask themselves if the company is developing things in a way that will satisfy the FDA
Until a drug is approved the FDA is the most important decision maker
#BiotechPrometheus
When thinking about valuing #biotechs, especially those which are not yet profitable, a probability adjusted discounted cash flow model is perhaps the most important methodology
Though it too has drawbacks
#DCF #PoS #learnbiotechinvesting #investing #BiotechPrometheus
Investors must continually assess the ever-changing Standard of Care landscape. It could change and make a positive clinical result less relevant
Also keep an eye on the competition
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Investors should note forecasters believe #ProbabilityOfSuccess across drug discovery will improve drastically (over 2x) versus existing success rates as AI-powered drugs go through the approval process
What do you think?
#learnbiotechinvesting #biotech #investing #BiotechPrometheus
Investors should look at fully diluted shares outstanding #FDSO when looking at the market cap of a company. Dilutive securities, including options, warrants, converts, etc, can have a meaningful impact on the actual market cap of a company
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Product differentiation is more important than classical drug models indicate
First-in-class will retain larger share if later entrants are not differentiated while a differentiated drug will gain outsized share even if a later entrant
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Investors can benefit from evaluating a drug the same way pharma does
In many cases a biotech's drug will be sold by pharma so understanding what they look for is important to know
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We seek to provide knowledge to biotech investors so you can make money in biotech stocks
Take the free course. It focuses on the basics
What other topics should we cover?
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Sometimes a #reversemerger or #SPAC can result in a high value (>$1B) #biotech buyout. Both ways enable private companies to go public without an #IPO
Here's a selected list:
Any others I'm missing?
Who will be next?
#learnbiotechinvesting #investing #BiotechPrometheus
As we say here often: "A press release is a marketing document, an SEC filing is a legal document"
Read the SEC filings! They exist to help #investors! And they are freely available, often on the company website
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It's important for investors to assess the clinical meaningfulness of a result
A "positive" result sometimes isn't enough if it doesn't significantly change the treatment landscape. But this can be subjective
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A key factor in understanding how a biotech drug is reimbursed is assessing where it sits on the formulary (its position)
This is a drastic simplification but useful to know
Be aware of the perverse incentives #PBM
#learnbiotechinvesting #biotech #investing #BiotechPrometheus
Do #biotech stocks over-react to bad news? A study found that on average, a biotech stock returns 72% after reporting negative clinical data after 12 months
An interesting find but likely a dataset quirk
What do you think?
#learnbiotechinvesting #investing #BiotechPrometheus
Investors should take an unbiased view of data and not only listen to management. Ask yourself: Is the drug doing what it's supposed to do?
Look for: getting to right tissue, target engagement, proof of mechanism, and proof of concept
#learnbiotechinvesting #biotech #investing #BiotechPrometheus
Investors should beware of drug revenue forecasts. They're often wildly off, either too high or too low
That will impact your analysis
This is from 2013. If there's more recent data, please cite the source below
#learnbiotechinvesting #biotech #investing #BiotechPrometheus
A key variable for investors is management reputation
A lot that happens inside a company that is critical for success is outside of public view
Investors must ask themselves if they believe management is giving an accurate assessment, both good & bad
#learnbiotechinvesting #BiotechPrometheus
