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The below is an interesting snippet from the Jan 17 blog post from shkreli. I think this is quite accurate and a good way to get a sense of managements vision. Competing on price is a race to the bottom, but we see a handful of, say, checkpoint inhibitors for instance. Roche's Tecentriq has competed with attempts at expanding the market and easier dosing. For "gems" as Shkreli calls them- they are not a zero sum game and it makes the pie bigger for everyone. It's a tens of billions market or more, so there is alot of room at the table. Good leadership recognizes this, especially for oncology.

I would caution that early on for newer companies, there is a balance between not being too focused on just developing the product for one indication (at the expense of not being able to expand labeling) and being so broad that you can't push a drug through the finish line and and have focusing on the near term.

It's also extremely rare to hit a multibagger in biotech since breakthroughs come so infrequently (compared to say, tech/Salas like Zoom, mongo, mercado libre, etc), especially from smaller companies- and they often get bought out before being able to reach 10x bagger status.

Anyway....


Everyone is in the same game of finding a gem. Except here there is no repurpose intelligence or anything. Just bust down the walls to approval and bring a Keytruda clone at a 50% discount. That actually hasn't worked that well in historical practice (EPO price wars, insulin, Remicade biosimilar market). It's often better to be a fast follower, keep the same price and try to grow the market. It's too late for that for PD-1. Price wars generally don't work for manufacturers (they're great for consumers/PBMs/HMOs) because manufacturers are quick to cut deals to keep volumes. It's a lose-lose race to the bottom, but it's not so much of a loss if you grab $1 or $2B out of a $30B market. There's a lot more to say on this, but let's leave it at: It will be interesting to see how it all plays out. I think it will come out somewhat favorably, but not for the initial goals/expected reasons.


So who can grow a market? I think the companies focused on tumor-agonistic approaches, some of the bispecifics, and diagnostics are good places to start. Obviously, I'm biased towards BPMC, TXG, and DMTK to expand a market. GH too.


Cheers.
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It's also extremely rare to hit a multibagger in biotech since breakthroughs come so infrequently (compared to say, tech/Salas like Zoom, mongo, mercado libre, etc), especially from smaller companies- and they often get bought out before being able to reach 10x bagger status.


Fuma102, I have avoided the biotech space for years, having bought some like 15 years ago. I started buying into them again, and your comment reminded me of one of the reasons I stopped buying them last time.

It seems we as individual investors buying biotech often take all the risk and little of the upside. I can't recall how many times I saw a company finally hit it, and start showing numbers, only to be bought out. Meanwhile if a drug is a failure the company is left for dead and individual investors are left holding the bag. It does not seem like a favorable risk/reward industry for that reason alone, not to mention most drugs simply fail to get approved, then those that do, there also seems only a small portion actually take off. So thanks for that reminder.

Right now my biotech stocks (not medical, strictly biotech) are: IOVA, ITCI, the 3 Gene Editing stocks plus BEAM, and TCDA. I did buy a little TCDA after all this bad news on the basis it could actually bring a product to market in the next few years. If they don't go into a financing death spiral, I take this as still a viable company trying to get a drug to market.

I am considering selling the gene editing stocks because they have gone up so much and are now 6% of my portfolio. I don't mind owning them as long as they are a small portion to the point I don't care if they go down again, since this is a multi-year-decade investment. So what they do between now and then is largely irrelevant. But they have gone up significantly that it sort of doesn't make sense when you compare them to other biotech companies a lot closer to the goal line. And 6% of your portfolio in one experiment a long way off starts to sound like a significant number.
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