Consider_this

Biotechs: The Cash Crunch

Problem is that the risk/reward ratio is way out of balance.

To both BIOs and Big Pharm, there's all the risk and they're huge (Recall how several big item drugs ran aground in late stages by Genentech, Merck, etc?)

And there's really no that much money to be made after taking all that risk. Two reasons. One is: you can thank the *COMPLICATED* govt regulation and expensive, even extortionist fees and process, which acts like a tax and money maker for the govt, on the whole discovery process.
Second is: you can thank all the insurance companies for squeezing out ever larger sums of money out of the whole process, such that less and less money actually reaches the drug producers! Such money is pure overhead and doesn't contribute to innovation or cost cutting technological improvements.

There's simply no good reward to invest more, so BIOs and Big Pharm don't.

We can only blame our own govt and system as we cry about no drugs to fight deadly disease.

On Feb 09 03:25 PM Tom B wrote:

> Gee, Big Pharma has basically given up doing research (but LOVES
> overpaid executives and expensive TV commercials) and VC's have given
> up on funding Biotech. Take home message: don't contract a life-threatening
> disease any time soon; help is NOT on the way.

Biotechs: The Cash Crunch

If the big pharma is smart, it'll wait. They're all stilling on piles and piles of cash.

"Buy now or forever be priced out"
BIO stocks will "forever be going up"
BIO companies are "too big to fail"

are all mantras of similar nature (hint: replace BIO with your favorite bank or overpriced house)

Fact is BIO is on collision course to bankruptcy; It never had a business model sustainable in a low/none growth, cash strapped environment.

Big Pharma has no such impending deadline. Let the BIOs sweat and then pick them up for pennies on the dollar. Free pipeline and research equity.