>>A bubble burst in biotech stock prices -- why are we not now experiencing it?
There are several related phenomena at work here:
1. The big biotech stocks like GILD are making huge amounts of money 2. The FDA has been more cooperative in getting breakthrough-type drugs on the market more quickly 3. There is a much greater emphasis on rare diseases where there is much less competition, chances of success are higher and pricing is very good 4. More focus on biologics which tend to have a greater success rate and also much longer effective exclusivity 4. Perhaps most significantly there has been a steady stream of M&A - the big pharma are short pipeline and so they acquire late-stage biotechs 5. Exciting new science (like immuno-oncology). 5. Very low long-term interest rates that support investment in longer term projects.
My own view is that as long as M&A continues at this pace then we are not in a bubble. Once that starts to slow down, I would become much more cautious.
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