The letter B is blazing hot. Whether it is news about how Bitcoin will revolutionize the world, or how the Ball Brothers will take over the Lakers, the second letter of the alphabet seems to be highly correlated with disruptive innovators. However, this post won't be dedicated to the Bitcoin enthusiasts, or the NBA fans that preach Lonzo Ball to be the savior of the Lakers. This post will be dedicated to the industry that I am so passionate about: Biotechnology.
Well known Venture Capitalists, Peter Thiel & Chamath Palihapitiya, have been outspoken about their thirst for innovation that has not yet been satiated. They argue that too much capital has been spent on opportunities that grant quick returns on investment rather than true innovation that will evolve humanity to new heights. This premise causes a problem for industries like biotechnology that rely on extreme patience and meticulous regulatory compliance.
It takes on average 12-15 years for a new therapy to be available to patients because of strict regulations from the FDA surrounding clinical safety and efficacy in humans. In these modern days of instant gratification, Venture Capitalists are also affected and turned off by the idea of such slow returns when they could invest in a software company that could IPO in a fraction of that time. This is about to change.
Not only are biotechnology companies becoming more data driven in all facets of their business, which include drug discovery, clinical trial management, and the manufacturing of their drugs, they are benefitting greatly by the Tax Cuts and Jobs Act of 2017.
The Tax Cuts and Jobs Act of 2017 will drive more liquidation events for investors, which will incentivize future investments in this industry. This is evidenced by innovative biotech companies conquering the biotechnology's reputation for relatively slow development and drawn out return. Companies like Juno and Kite Pharma have provided rapid and astronomically large returns for their investors with current Merger and Acquisition activity (22-114x returns!).
More on these returns can be found in this article covering the two hot CAR-T cell therapy companies: https://www.forbes.com/sites/brucebooth/2018/01/23/two-carts-two-charts-dissecting-returns-from-t-cell-therapy-ma/#4b6f5449459e
Hopefully the therapies will ultimately provide the same amount of benefit to the patients they serve, and further incentivize investors to support entrepreneurship in biotechnology! I predict that 2018-2019 is going to be a great time period for new investments in the biotechnology industry, and I would love to hear your thoughts!
Additionally, this is a list of Mid/Small Cap biotech companies that I have compiled over the previous year for the Investment Club at my graduate school. Following my hypothesis on biotech being bullish, I would surmise that some of these companies are prime targets for those large cap biotech companies wishing to expand their product portfolios.
My List of Small/Midsize Biotech Companies for your viewing pleasure:
https://docs.google.com/spreadsheets/d/1OnUpJ7nGB2dBUsA-zE-4v6svIKyuwMqD-oQbGr1abDI/edit#gid=0
Thanks for listening in on my opinions, and more importantly thanks for tuning in to my first post on steemit! :)