Pharma companies at the 2009 J.P. Morgan Healthcare Conference cited a willingness to do ‘more deals and bigger deals’.  This will hopefully give the required stimulus for the Biotech sector.  J.P. Morgan has released a list of Biotech stocks with “high strategic value” in 2010.

1. Acorda Therapeutics(ACOR)
2. AMAG Pharmaceuticals(AMAG)
3. OSI Pharmaceuticals(OSIP)
4. Medivation(MDVN)
5. United Therapeutics(UTHR)
6. Vertex Pharmaceuticals(VRTX)
7. Human Genome Sciences(HGSI)
8. Seattle Genetics(SGEN)
9. Savient Pharmaceuticals(SVNT)

Lehman Brothers also issued its 2010 biotech forecast “Opportunities for the U.S. biotechnology group are selective and we tend to prefer small-mid cap stocks over large-cap stocks overall”.  Their list includes:

1. Amylin Pharmaceuticals(AMLN)
2. Cephalon(CEPH)
3. Human Genome Sciences
4. Onyx Pharmaceuticals(ONXX)
5. Regeneron Pharmaceuticals(REGN)

Biotechnology is technology based on biology, agriculture, food science, and medicine. Modern use of the term usually refers to genetic engineering as well as cell- and tissue culture technologies.

Biotechnology has applications in four major industrial areas, including health care (medical), crop production and agriculture, non food (industrial) uses of crops and other products (e.g. biodegradable plastics, vegetable oil, biofuels), and environmental uses.

For example, one application of biotechnology is the directed use of organisms for the manufacture of organic products (examples include beer and milk products). Another example is using naturally present bacteria by the mining industry in bioleaching. Biotechnology is also used to recycle, treat waste, clean up sites contaminated by industrial activities (bioremediation), and also to produce biological weapons.

There are different brances of  Biotechnology as a science. Red biotechnology is applied to medical processes. Some examples are the designing of organisms to produce antibiotics, and the engineering of genetic cures through genomic manipulation.  In this article we will look into red biotechnology primarily.

Most traditional pharmaceutical drugs are relatively simple molecules that have been found primarily through trial and error to treat the symptoms of a disease or illness. Biopharmaceuticals are large biological molecules known as proteins and these usually target the underlying mechanisms and pathways of a malady (but not always, as is the case with using insulin to treat type 1 diabetes mellitus, as that treatment merely addresses the symptoms of the disease, not the underlying cause which is autoimmunity); it is a relatively young industry. They can deal with targets in humans that may not be accessible with traditional medicines. A patient typically is dosed with a small molecule via a tablet while a large molecule is typically injected.

Small molecules are manufactured by chemistry but larger molecules are created by living cells such as those found in the human body: for example, bacteria cells, yeast cells, animal or plant cells.

Modern biotechnology is often associated with the use of genetically altered microorganisms such as E. coli or yeast for the production of substances like synthetic insulin or antibiotics. It can also refer to transgenic animals or transgenic plants, such as Bt corn. Genetically altered mammalian cells, such as Chinese Hamster Ovary (CHO) cells, are also used to manufacture certain pharmaceuticals. Another promising new biotechnology application is the development of plant-made pharmaceuticals.

The truth is, it’s hard to find a successful large-cap biotechnology company because most get acquired before they reach large-cap status. Companies in biotech  industry are always in need of cash, whereas  big pharmaceutical firms are cash-rich and are  in desperate need of pipeline drugs.  These small-cap biotech start up firms are there easy catch.

Most biotechnology companies are started by a brilliant scientist with an idea, sadly a brilliant scientist is not always a brilliant businessman.  These companies dream of becoming the next Genentech, Amgen, or Genzyme. But building a successful biotechnology company takes a lot more than just a brilliant scientist with a great idea.

Most of the biotech companies trade at sub-$1 levels, because biotech drug development is both extremely expensive and very high-risk. As a result, most biotechnology companies either fail in the clinical program or run out of money while trying.  Most pharmaceutical names are sitting on billions of dollars in cash, while their late-stage research pipelines are drying up.

Most Biotech company management  are overconfident, under experienced, and fail to truly understand the competitive landscape for their drug. This results in biotech companies reluctant to partner with pharmaceutical companies too early in the development process, because they think they can either do it alone or they will command a far greater price the further along they develop the asset. 

In theory, this is true. The difficulties of commercializing a successful biotech drug, however, only increase as development pushes further along. And successfully completing a Phase III trial is not the finish line, it is just the start of a whole new marathon that now includes preparing an NDA/BLA, getting that application passed by the FDA, manufacturing the drug, and then, managing a sales force, as well as Wall Street expectations. As a result, an asset that was partnerable after encouraging Phase II data becomes unpartnerable after the Phase III trial fails or the FDA requests additional data prior to approval.

Unfortunately, the only way that biotech companies have a chance at coming to market with a successful drug is by spending money on R&D.  Every Biotech or pharmacy company has to pass many hurdles before they come up with a successful product in the market. If you take the history of Biotech companies, most of them had been at the brink of Bankruptcy at one point of their life.  This is primarily due to the lack of income during the research and development stage of the product. It takes long to successfully develop, get approved by FDA and successfully market the product.  Check to see whether they have enough money to survive through this phase.

 A good way to gauge how well a biotech company is doing is to simply follow the FDA trials for its key drugs. If you follow the trials, you can see if any potential drug is advancing or showing positive results. Of course, these trials make for great catalysts for the stocks, especially when there is bullish news.

Keep watch on companies coming up on trials for phase II and phase III studies of FDA drug approval. Combine that key information with an unemotional view of a potential company’s stock chart, and you might be able to spot some big opportunities in the biotech sector.

There are a number of companies poised to report key clinical results, it might be well worth the time to evaluate their charts. So watch out for FDA announcements.

There have been significant developments in biotechnology making it one of the most lucrative investment options. Yes, biotechnology investing is considered to be the future by many investment experts.

Most venture capitalists today are looking at biotechnology companies in a different light. The opportunities for investors to generate impressive revenue growth are one of the prime reasons why this has happened.

Also the trend to spend till we get the best in health care is another reason. Man does not like to compromise when it comes to good health and biotechnology has been one of the chief gainers of this principle.

Why is it Important to Invest in  Biotech?

There are many small biotech companies who are waiting for that golden opportunity. Some of these companies have displayed their flair and skill in just a few years of their existence.

With the right investors these companies can work wonders. Who knows, the drug for Alzheimer’s or cancer might just be underway in some of these companies.

From a business point of view, such a drug can be the single factor that will power you from rags to riches.

But biotechnology investing is not that easy. It is a task that requires a set of special skills so that you can spot the best company instantly.

Finding the right company to invest

It is very hard for the novice investor to follow up the Biotech stocks.  The best option in this case is to follow reputed stock analyst or invest in Biotech Based mutual funds.