Replies to post #133325 on Biotech Values

[DewDiligence]

Housekeeping note: A link to the common biotech-newbie mistakes compilation will reside in the iBox of this board. The intention is that this compilation will be updated and expanded periodically.

[biomaven0]

>newbie-mistakes

How about:

"It's a different company now - they even changed the name!"

Peter

[geocappy1]

All very good points indeed.

My investor rule #1. Never listen to someone's advice who has no skin in the game and if he has skin in the game that is contrary to you, definitely do not listen to him. Be very cautious of him when he comes to your board and makes statements with misrepresentations and when asked to clarify he avoids, deflects, and changes the subject.

[olddogwithnewtrix]

2 I see a lot lately related to dndn, "They have an approved drug, so"

a) they should be worth more than all other companies that do not have approved drugs.

b) they will make a lot of money.

margins seem to be one of last things new investors look at with any stock.

[Biowatch]

If the FDA accepts an application, it means they will approve the drug.
(I have read this several times. Very naive belief.)

You can tell how well a drug works by how long it takes to finish the clinical trial.

[ilpapa]

You haven't listed the multiple uses of the word "manipulation" to justify hanging on to a dog going south.

[imnot6]

Calculating total CBNM odds of failure

I would suggest that multiple items from the same category are additive and the number of different categories are multipliers. The R&R item is probably added as some numerical constant, like Avogadro's number or geese in a gaggle or something.

[DewDiligence]

Matt Herper of Forbes tweeted that only 2 of these 18 items are ever even partly true. I wonder which ones he has in mind.

[pcrutch]

This posts fits just about everything that PPHM longs have touted over the years. Ha!

[ghmm]

It seems DCTH is trading on item 14 today

[DewDiligence]

A new item for the biotech-newbie mistakes list: “If data are being presented at a medical conference, the clinical trial must be a success!”

Example: #msg-70354671.

[DonShimoda]

Newbies will often interpret a longer than expected trial as "proof" that the drug is working. The certainty with which they express their conviction, or "newbitude", can lead to some interesting exchanges. Alas, some bio investors are destined to always remain "newbies" ;)

[DewDiligence]

This HCV post from the PPHM board is such a blatant instance of biotech-newbie misconception that it warrants cross-referencing: #msg-70901639.

[iwfal]

Common Biotech-Newbie Mistakes

[Updated with a section on statistics related errors.]


Drug programs:

1. “If a drug does something notable in animals, it must be safe and effective for humans.”

2. “If a drug from the same class succeeds, it means my company’s drug will succeed too.”

3. “If a drug with the same mechanism of action succeeds, it means my company’s drug will succeed too.”


Dealings with the FDA:

4. “If a drug has Fast Track status, it means FDA approval is very likely.”

5. “If a drug has a Priority Review, it means FDA approval is almost certain.”

6. “If a drug has an Expanded Access program, it must be safe and effective, so the FDA will obviously approve it.”

7. “If a company has a meeting with FDA staffers and does not issue a negative press release, it means the FDA agrees with everything the company is doing.”


Behavior of company management:

8. “If the CEO says a company is talking to partners, it means a partnership is imminent.”

9. “If a company goes into a period of radio silence, it means they are negotiating a big partnership deal or buyout.”

10. “If an FDA application is started on a rolling basis pending the completion of clinical data, it means the data are positive. The company would not waste so many man-hours of work on the submission if it weren’t.”

11. “If a company is preparing for a launch—e.g. by advertising for sales reps—it means their drug will surely be approved.”

12. “If a company holds an investor conference call on a different day of the week (or a different time of day) from prior conference calls, it means a hugely bullish announcement is coming!”


Miscellaneous:

13. “If a former executive from Big Pharma joins a small biotech company, it means the small company must be a winner!”

14. “If the company’s Scientific Advisory Board has one or two famous individuals, it means the company’s drug candidates must work. These people would not align themselves with a failure!”

15. “If Rodman & Renshaw issues a positive opinion on a company, it means the company’s prospects must be bright.”

16. “If a well known investor or hedge fund owns shares, it means the company will surely succeed.”

17. “If a small biotech company is located in the same town as a Big Pharma, it must be a top candidate for a buyout.”

18. “If knowledgeable posters are bashing a stock, it means they are trying to ‘accumulate’ shares, so I should increase my holding!”

Statistics:

19. "If the trial wasn't halted for futility at the interim the trial must be a success."

20. "If the trial is 'running long' the trial must be a success."

21. "If my company has data from even a small (or post hoc) ph i or ph ii then it hugely outweighs the general fact that drugs in similar indications (or using related MOAs or ...) have a very high failure rate in ph iii."