And even when candidates pass clinical trials, nothing guarantees the FDA will give them its seal of approval.At the end of the day, less than 10% of ALL drugs that enter clinical trials will receive final FDA approval.There are hundreds of biotech companies in the U.S. with numerous drugs in their pipelines. Yet in 2016, the FDA cleared just 22 new medicines for sale – a six-year low.And even then, most of these drugs will fail to achieve blockbuster status or reach over $1 billion in sales.As you can see, the odds are stacked heavily against investors hoping to partake in the “next big drug” advancement.So… after years of skepticism, analysis, and investing in this turbulent industry, I’ve had to nail down a strict trading criteria.Every analyst has his share of winners and losers. But this formula has worked for me time and again…It’s a set of rules that will not only protects you from the massive volatility in this sector… but can help you safely pocket 300%-plus returns along the way, without getting lucky.
In my 20-plus year career as an investor and investment analyst, I’ve covered every single sector of the market.I’ve combed through thousands of institutional research reports that large investment firms – like Goldman Sachs, Morgan Stanley, and JPMorgan – publish.They pay their analysts salaries in the high six-figures to write these research papers. They include traditional financial metrics like discounted cash flow models, earnings estimates, and price targets. They also usually offer ratings like buy, sell, or hold.But after learning the hard way, several times over again, I’ve realized most of this material is unreliable.I’ve seen bad calls in the homebuilding sector… the steel sector… the mining sector… and the retail sector. But in my varied experience, I can tell you that one sector produces more poorly timed calls from Wall Street than any other.That sector is biotechnology.Risks aside, biotech is poised to be one of the greatest growth industries of the next 50 years. From 2012 to present (November 2017), biotech stocks have outperformed the S&P 500 by almost 100%. And as technological innovation grows exponentially, medical breakthroughs and drug discoveries will only continue.Very few sectors present the opportunity to invest in companies that can yield life-changing results, literally.When things work out, not only can you make a fortune, but in some small way, you’ve been involved in the development of a desperately needed therapy or medicine.It’s surely a difficult market to ignore.But I can tell you with absolute certainty… most people lose their shirt buying biotech stocks.Like the precious metals and resource market, biotechnology is an extremely risky sector – flooded with the most volatile investments you can ever make.Sure, the rewards can be great… If you buy shares of a small biotech stock and its drug gets FDA approval, you’re sitting on a small fortune.But here’s the story most investors don’t hear: Almost all experimental drugs will never get FDA approval.It’s why picking biotech losers is far easier than finding a single winner.Let me explain…Before reaching any pharmacy shelf, a new drug must pass through a regulatory gauntlet.These are clinical trials, known as Phases I, II, & III, hosted by the U.S. Food and Drug Administration (FDA). For experimental drug companies, this is a costly process that can last several years.Which brings me to the most important thing investors need to know about the industry…The FDA, single handedly, controls the fate of any new drug, treatment, or medical discovery.More importantly, whenever the FDA raises an eyebrow, speaks, or makes any decision… share prices explode. And often for the worse…Approximately 70% of drugs get past the initial Phase I. But after that, only 33% of drugs on average succeed past Phase II. Once a drug reaches the most pivotal stage, Phase III, it has only a 25% chance of reaching final FDA review.As you can see in the graph below, approximately 70% of all drugs in Phase II trials will fail… and so will over 40% of drugs in Phase III.
And even when candidates pass clinical trials, nothing guarantees the FDA will give them its seal of approval.At the end of the day, less than 10% of ALL drugs that enter clinical trials will receive final FDA approval.There are hundreds of biotech companies in the U.S. with numerous drugs in their pipelines. Yet in 2016, the FDA cleared just 22 new medicines for sale – a six-year low.And even then, most of these drugs will fail to achieve blockbuster status or reach over $1 billion in sales.As you can see, the odds are stacked heavily against investors hoping to partake in the “next big drug” advancement.So… after years of skepticism, analysis, and investing in this turbulent industry, I’ve had to nail down a strict trading criteria.Every analyst has his share of winners and losers. But this formula has worked for me time and again…It’s a set of rules that will not only protects you from the massive volatility in this sector… but can help you safely pocket 300%-plus returns along the way, without getting lucky.
And even when candidates pass clinical trials, nothing guarantees the FDA will give them its seal of approval.At the end of the day, less than 10% of ALL drugs that enter clinical trials will receive final FDA approval.There are hundreds of biotech companies in the U.S. with numerous drugs in their pipelines. Yet in 2016, the FDA cleared just 22 new medicines for sale – a six-year low.And even then, most of these drugs will fail to achieve blockbuster status or reach over $1 billion in sales.As you can see, the odds are stacked heavily against investors hoping to partake in the “next big drug” advancement.So… after years of skepticism, analysis, and investing in this turbulent industry, I’ve had to nail down a strict trading criteria.Every analyst has his share of winners and losers. But this formula has worked for me time and again…It’s a set of rules that will not only protects you from the massive volatility in this sector… but can help you safely pocket 300%-plus returns along the way, without getting lucky.
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