Here I’ll do you one better.
“The Plains of Hesitation.
I've been thinking about all of my investments over the last three decades and most recently within the last two decades, my experience with investing in the biotech space. Because of this experience, I want to share with new or young investors what I've found to be the good, the bad and the ugly about biotech investing. I can't possibly cover everything but, want to touch on just a few. Some will call it conspiracies but, it's not a conspiracy if it's true and I have plenty of examples, not anecdotal fluff.
First, my reasons why? Thirty years ago, the technology to share information, as we know it today did not exist. The Internet was just coming out of its infancy into the market. It had always been part of the US Defense technology, spearheaded by the Defense Advanced Research Projects Agency (DARPA), but was not available to the masses. I still remember the commentary in the news that this couldn't work, for many reasons but at the time because home computing had just got off the ground in the 1980s and dial up modems were the only connection, combined with bytes at low levels and processors being first iterations, i.e.; "The Intel" 16 bit processors. I was happy getting my first Hewlett Packard that ran on 64 bits, and upgraded to 128 bits when I purchased it from Circuit City. It was the shizzle! Apple phones weren't what you carried, rather flip phones, Blackberry phones or satellite phones. My pager was more valuable to me at the time than my computer. So, wrapping this paragraph up, nobody could share their experience with you unless you read the ticker in the paper the next day, heard from a friend or took advice from your broker.
Now, the meat and potatoes.
The Bad! In my personal humble opinion, the bad is lead by the bureaucracy at the FDA. Honestly, they have put such a bad taste in my mouth after watching what they do to small research and development companies with "unproven" promising technology. The wheels turn at turtle speed, they give advice on clinical trial design that is either unwarranted, later disregarded or rejected by the next level of FDA oversight as not being rigorous enough, lacks population size i.e.; (demographics), moved the goal posts, now want more than ABC and want ABCDEFG, out of the blue ask for comparisons to biomarker groups to determine if improved outcomes can be demonstrated, etc. You get the picture. Worst of all, it can happen at any phase of trials along what is already a 10-13 year journey for drug approval! Over the course of time, the share price rises on approvals and can drop on news of more FDA delays. Yes, they serve a purpose and I'm not saying they are at fault. Just bringing it out into the light for new biotech investors what typically awaits them. The longer the research takes, the more delays are likely to occur thus, the lower the SP can go.
The second "bad", if you can imagine this is Wall Street. Can't say I have firsthand relationships with the ilks of people such as Martin Shkreli, but we have plenty of examples of bad actors who for one reason or the other have taken overt actions to destroy biotechs. Martin Shkreli, you may know him as "Pharma Bro" but, before his involvement with buying a pharma and raising prices, he ran his own hedge fund. He personally would write a persuasive argument against a drugs approval and send the letters to the FDA ADCOM committee hearings before voting on whether to move forward with a drugs approval. He would hold a large short position in a company and for dubious reasons, execute a plan to destroy the wealth of shareholders, catch and kill new technology and smile at you with that smug face while hiding behind his veil of lies and deceit. He finally was convicted and sent to prison, although out now, for his lack of moral character and deceit.
If the cards aren't already stacked against you in this space with two "bad" concerns, I'll add a third. There are behemoth large cap pharmaceutical players ($200B+) who spend billions of dollars to buy small companies in order to further their science, whether infectious diseases, medical devices, oncology, transplants, and the various sub-research categories such as stem cell, CAR-T, mRNA/DNA, mAbs, etc and on marketing and sales in order to drive out competition, keep market share and prevent the paradigm shifting new drug/technology from either cannibalizing their products and to dampen any threat they perceive as creative destruction. They're directly in competition with each other and small cap biotech research companies are collateral damage in the crossfire.
The Ugly! Research and Development companies are not typically flush with cash. In fact, frequent fund raising is a huge part the CEOs goals. They travel all over the United States and will get 10-15 minutes to do a presentation in order to expose institutional investors to the XYZ "story" that is their brand, pipeline, discoveries, current assets, and people of XYZ Biotech. Not so bad, right? Whether through dilution, credit facilities, issuance of convertible debt/bond instruments and the like, these efforts while necessary, can adversely impact your investment. A lot of the time spent at these healthcare conferences for early stage biotech's is spent on finding a source, book maker, a financial institution that specializes in providing finance options to the CEO, who will later transact a share offering ( or some other instrument) and in return, the book makers profit from the deal. It's a never ending death by a thousand cuts of toxic financing that typically damages the share price.
So, several examples that create wealth destruction for biotech investors; Delays by the FDA, WS greed, large cap pharmaceuticals preserving their stranglehold on the market and toxic finance deals. Can there be any good left? What have I learned that leads me to the good? Well, to start, I try to navigate and circumvent around, over and under all of the bad. First, I never buy for the long term into a biotech that is just starting out. The novelty of their ideas generates a large swell of interest at the beginning. Once the honeymoon affect wears off, the slow walk down into the death spiral begins. While that sounds bad, it is usually for these who bought into the hype at the beginning. While WS is profiting off deals, running up SP and creating FOMO, they drag it back down. Buyers lose interest, algorithms takeover and before you know it, you are trading on the OTC in decimals out to one thousand.
But, what if you found a company that has been in existence for decade(s), suffered through all of the bad (outlined above) either through self-affliction, poor corporate oversight, poor fiscal management, unsound accounting principles, FDA delays, sabotage, etc. yet they owned a drug that is well established in the medical community, the drug's safety profile was well-known and supported with volumes of publications, clinical trials were well underway and results showed promise and most, if not all of the suffering over a decade that happened to early investors was years and years out of your way? As a bonus, the ridiculous "once in a life time" share price is still at rock bottom prices? Relatively speaking, this has been in the ball park below one dollar since January 2022 with the exception of a brief 5 day run up in late July-early August 2022.
Do you scoff at the opportunity, still concerned with the "Bad and the Ugly," when I detailed for you who, what, when, why and how transformative biotechs with promising technology find themselves in such a demise? If you just discovered CYDY, you are one lucky investor. Their drug, Leronlimab is a blockbuster drug with such attention by those I've described above. I implore you to do the research on every thing I've said. Join chat groups, GOOGLE "Leronlimab" and "CCR5" and learn the method of action of this drug and, read why HIV positive patients such as Charlie Sheen have publicly stated this drug aka PRO140 saved their lives. If you read all of this and find yourself asking "Do I go ahead and toss some money here or do I wait", I share with you this favorite quote of mine, "Upon the plains of hesitation bleached the bones of countless millions who sat down to wait..and while waiting, they died. (Anonymous)
Pardon any grammatical or spelling errors. Give the old guy a break!
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