The Biotech Haunted House

At the Motley Fool, Brian Lawler invites investors to step inside the Biotech Haunted House to catch a glimpse of the ghosts and ghouls that haunt the biotech industry. “It's a house full of stocks not suitable for the faint of heart, as unseen dangers and hobgoblins lurk around every corner.” As we all know, it takes a rather hearty individual to brave the scares a typical bio investor faces when toiling in this market. Here’s your chance to see if you have what it takes. Upon entering the haunted house, you must steel yourself for frights from the FDA as it demands more trial data from companies and pull drugs from the market--scaring investors out of their wits in the process. But this isn’t the worst fear you’ll face. Around every corner there’s the carnage left behind from major trial failures of companies such as Renovis and Neurocrine Biosciences, whose shares lost 50 percent of their value on bad data. But while some companies may crash and burn, the biotech industry isn’t without its share of the living dead. “These zombies like Biosante Pharmaceuticals or Titan Pharma have been running around for years on the hopes and dreams of a few investors after multiple failed clinical trials and have little chance of bringing quality drugs to the market.” (Ouch!) If you manage to dodge the zombies, watch out for the enchantment cast by the witches at Arena Pharmaceuticals or Exelixis; they’ve bespelled investors into ignoring the obstacles that stand in the way of FDA approval for their drugs. And as for investing in unproven technologies such as cancer vaccines or antisense drugs? Here there be monsters. In the biotech haunted house there are vampires waiting to suck investors dry, so enter at your own risk. Report

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