Written by Summary
Investing in the biotech industry is an art, not a science.
While the potential for gains from groundbreaking therapies exists, the majority fail.
By utilizing statistics, careful selection, and net present value calculations, it is quite easy to find a basket that fulfills your preferable risk tolerance.
By taking the gambling out of biotech investing, one can find peace in stable returns and support of a wide range of potentially life saving innovations.
ipopba/iStock via Getty Images Introduction to Biotech 101
In this course, we will learn about the principles of Biotechnology, discuss example companies, and cover theories and investment strategies that are useful for investors wanting exposure to the sector. Biotechnology companies, and to a greater extent the entire healthcare industry, are some of the most impactful investments one can make, whether for the advancement of healing technologies or personal financial success. However, risk abounds, and one must be careful. Nature is nowhere accustomed more openly to display her secret mysteries than in cases where she shows tracings of her workings apart from the beaten paths; nor is there any better way to advance the proper practice of medicine than to give our minds to the discovery of the usual law of nature, by careful investigation of cases of rarer forms of disease. -William Harvey, 1657 Biotechnology has been the basis for human health ever since microorganisms were beginning to be understood at the turn of the 19th century. However, it was not until penicillin was studied and developed for use by Alexander Fleming in 1928 that any full-scale biotechnology applications existed. Further, the industry remained focused on chemical therapies, and this led to a pharmaceutical industry that was born amidst the industrial revolution. Names like Merck ( MRK ) and GlaxoSmithKline ( GSK ) have roots that stretch back to the 18th or even 17th centuries.
Many have the misconception that the modern techniques relating to DNA or RNA were thanks to Watson and Crick, but genome focused research has been a part of our world since the discovery of nucleic acids by Swiss Chemist Friedrich Miescher in 1869. More than 50 years passed before the significance of Miescher’s discovery of nucleic acids was widely appreciated by the scientific community. For instance, in a 1971 essay on the history of nucleic acid research, Erwin Chargaff noted that in a 1961 historical account of nineteenth-century science, Charles Darwin was mentioned 31 times, Thomas Huxley 14 times, but Miescher not even once. This omission is all the more remarkable given that, as Chargaff also noted, Miescher’s discovery of nucleic acids was unique among the discoveries of the four major cellular components (i.e., proteins, lipids, polysaccharides, and nucleic acids) in that it could be “dated precisely… [to] one man, one place, one date.” Modern techniques have shifted towards utilizing our unicellular and viral friends, with applications such as CRISPR, viral vectors, and monoclonal antibodies all based on natural processes. For example, CRISPR gene editing techniques are based on the natural process of viral DNA being incorporated as a bacteria’s own immune defense, as a way to protect against future infection. While you can spend a lifetime, or an expensive degree, learning about all the tiny details, as an investor from outside the industry, one need not shy away, and many reports, presentations, and articles are created to express the complex information for the masses. The range of possibilities is huge with our current understanding of life. (Revers & Furczon) Revers & Furczon Revers, L.; Furczon, E. (2010). An introduction to biologics and biosimilars. Part I: Biologics: What are they and where do they come from? Canadian Pharmacists Journal/Revue des Pharmaciens du Canada, 143(3), 134–139 Biotech Company Breakdown
Much can be said about the difference between a pharmaceutical and biotechnology company, but the two fields have been intrinsically intertwined in the modern era. Nowadays, most small-scale companies that attempt to develop novel therapeutics, regardless of the type, are thrown into the biotech basket. For simplicity’s sake, it is easier to account for companies this way, and from now on, any group developing a novel therapy, whether small molecule or stem cells, will be referred to as a biotech company. Only those giant companies already referred to as pharmaceuticals shall retain this distinction: Pfizer ( PFE ), Johnson & Johnson ( JNJ ), Roche ( OTCQX:RHHBY ), etc. Pharma Companies
Yield and value seekers rejoice, your Pfizer, Roche, and AbbVie ( ABBV ) shares all contribute towards biotechnology research, manufacture, […]
source Biotech 101 Lecture 1: Intro To Biotechnology Investing
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