Biotech Values

[IgnoranceIsBliss]

Because of program-survival bias, investors should absolutely not assume that phase-3 performance will be consistent with phase-2.

I assume this term means something like the investment fund hoax where a firm starts 10 funds and kills all but 2, the best performers. Then they can post track records on those funds and it makes them look like geniuses, even though there always would have been a few good ones no matter what they did.

I think this is fair and correct, but situation dependent. If a company splattered its drug across 10 indications and cherry-picked the one trial where the drug did something, then statistically you can invalidate that result and be very skeptical. If a company ran few trials for one indication and kept going based on consistently good results in that narrow path, the bias is much, much smaller.

Again, your point, taken too dogmatically, would lead one to assume that in literally every case, the chance of failure would overwhelming any reason to be positive about a drug. One would then only invest in mature pharmas.