WELL KNOWN FACT THAT BIOTECHNOLOGY COMPANIES like ENZC genarally don't make MONEY for years.
THAT being said ENZC time is coming SOONER than later.
How to Invest in Biotech
Biotech stocks are historically volatile. Often, the value of the stock is all speculative and based on the promise of a new drug or treatment. Until the drug proves viable, receives FDA approval, and hits the market, investing is a big gamble. However, stock prices for these companies are often very low right up until news breaks. If you do your research and get in early, you can make a tremendous amount of money in this sector. Follow these steps to vet any biotech investment you’re considering.
1. Determine the sector
As mentioned, ‘biotech’ can be used as an umbrella term for any pharmaceutical. If you want to invest in a true biotech company, one that works exclusively with biological material, you need to learn about what the company does rather than just looking at its designation.
2. Establish an acceptable risk
Know how much money you’re willing to risk if the stock goes south. Establishing this before you find a company you’re excited about will hopefully help you act judiciously when it’s time to actually pay out for shares rather than acting on impulse and emotion.
3. Know the downsides:
Clinical trial failure: If the drug fails in clinical trials, the company has to essentially start the scientific process over, which can take an enormous amount of time and send its share price spiraling.
Approval delays: Regulatory approval can take a long time. Even if a drug does well in trial, until it comes to market, the stock value might plateau or drop.
Commercialization setbacks: With all approval in place, the company still has to get the drug to market and hope it sells.
4. Assess the company’s history
Learn about the company. See how quickly they’ve gotten other drugs to market and whether or not those drugs have good commercial sales. Biotech companies pop up all the time with no history to review. These investments are particularly risky, but also offer some of the highest potential payouts if they’re successful.
5. Keep your portfolio diversified
Avoid putting too much of your money into the biotech sector. Keep your portfolio diversified in case your investment doesn’t pan out. Greed can lead to devastation.
6. Check-in regularly
Biotech stocks are not investments you can purchase and sit on for years. Keep track of price, volume, and news from the company to see if you should invest in more stock, part with the shares you have before losing money, or sell at a profit.
Tips for Investing in Bio Stocks
Use these 11 tips to help you find great potential investments in the biotech industry and make data-driven, research-based trading decisions.
Know Where the Company is in the Process
It might cost slightly more to get in when a company is out of the clinical trial stage of product development, but it could potentially save you from losing a lot of money if they don’t even make it that far in the process. It’s important to know where the company is in development before buying in.
Consider Risk
Know the risk the company presents. You’ll want to assess history, stage of development, pipeline, partners, cash-on-hand to debt and ‘potential’ cash, and the company’s leadership and reputation. If you feel uneasy about more than two or three of these factors, it might not be the best risk level for you.
Look for Companies With Multiple Plans
It’s tempting to put all your money into a company that’s focused on a single product and putting all its money and resources into it. However, it’s often a safer investing move to find a company that has several ongoing projects in case its front runner fails.
See Who Is Investing
Look and see who’s investing in the company. Often, big-name companies, either in the industry or even some from outside, will put money into the biotech firm’s research and development. You want a solid amount of funding from reputable sources.
Find Companies With Partners
Support, support, support. Any company at risk of going under should their one drug lose viability is not a great investment. Look for companies with partners who can continue project funding should the front-running drug fail at some stage in the development process.
Know the Cash to Biobucks Ratio
The biotech industry uses the term ‘biobucks’ as a synonym for potential payouts should their drug make it to market. Many biotech firms calculate their support using upfront cash and biobucks. If you see an announcement that a biotech firm just got a huge deal, look at the fine print to see how much of that is cash now and how much is conditional.
Look Past the Press Releases
Reading the news about the company and its development progress isn’t enough. You need to dig into its research and see how frequently researchers are performing clinical trials compared to how often you see ‘news’ about the company. You want actual progress, not just the illusion of progress.
Look at the Competition
Multiple companies competing over the same treatment can help boost stock prices, but if you side with the losing company, you could be out a lot of money. Consider investing in companies that don’t have any immediate competition.
Consider the Leadership
Look at the leaders of the company. Learn about their history, management style, risk tolerance, and other characteristics. You want to invest in a company with trustworthy and capable leaders.
Avoid Emotional Investing
If you find yourself getting super excited about a potential investment and itching to hit that buy button without any research, take a minute to calm down. Emotional investing without the facts can lead to disaster in the biotech industry.
