Innovation Pharmaceuticals Inc (IPIX)

[CallMeCrazy]

Billionaire's advice on investing in zero-revenue biotech stocks:

http://blogs.wsj.com/venturecapital/2014/06/26/doctor-founder-billionaire-talks-about-biotech-investment-stocks/?KEYWORDS=Dr+Patrick+Soon-Shiong

Q: So how does one do that? How can people spot a healthy biotech company, putting aside its stock price?

A: There’s no way to generalize. But you ask: Is the science sound? Is there an unmet need? Has the company built a translational application that is demonstrable in trials? Can you do this at scale? Does the technology improve or impact outcomes for the patient?

If it brings value to the patient, it’s a company of value. We spend $4.3 trillion a year on health-care in the U.S. If the focus of your company is to increase value to the patient, then you will organically grow. A lot of these companies have zero revenue, so the only way to measure them, really, is to ask: Is there forward movement of this technology platform?



Q: What other advice would you give to biotech investors?

A: It’s science. It’s a 10-year horizon. Not everyone wants to invest with a 10-year horizon. There are long lead times, there are trials. If you’re impatient, as an investor, it can be bumpy. Choose wisely, because it takes a decade. It’s never a short-term thing.

When I took American Pharmaceutical Partners public in 1998, it opened at $14 a share. It dropped to $8 a share. Later on, we were so confident of the technology and the business model that we bought $30 million of the stock back. This was eight months after our IPO.

Our drug [a formulation of cancer drug Heparin] came out in 2001, and our stock hit $45 per share. It later split into two companies, and they were both acquired. In 2008, APP was the only safe supplier of Heparin in the country. That’s not a business model. That’s a company focused on benefitting the patient.

Q: So what does the future hold for these biotech stocks?

A: The strong will survive. Not strong as in financial strength, but sustainable value–value to the patient.