Common Biotech-Newbie Mistakes
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!”
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!”
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!”
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."
was originally posted on Investors Hub Biotech Values Board by Due Diligence on 01/26/2012.