Biotechnology companies or biotechs as they are commonly known are producers of medicine from living organisms such as bacteria and enzymes as opposed to pharmaceutical companies that produce medicine from chemicals. Biotechs incur high costs due to their extensive research and development, testing of new products and the length of time it takes to manufacture a new product.
The massive resources needed by a biotech calls for seeking investors to pump their money into the biotech company so as to produce the product or products it is researching on. The biotechnology company needs a well-informed and experienced consulting firm such as LifeSci Advisors LLC, to put its case out there to the potential investors so as to get the funds that it needs so much for its projects.
What Biotech investors should know before investing
The drugs the biotech is working on
The potential investor needs to hear what drug or drugs the biotech company seeking finances is working on. This will enable the investor to have an idea of what kind of project he or she is about to put his money into. A biotech working on a drug that will have a wide patient population is a better investment than one targeting a small population. The investor needs to consider the size of the target market or what illnesses the drug is intended to treat.
The stages the drug will go through before approval
The would-be investor needs to know the possible number of phases the drug will go through before being approved by the relevant authorities for commercialization. At this juncture, the potential investor should also seek to understand the stage at which the drug is at the time of his coming on board. The more the stages to possible approval the longer the time the investor may have to wait to get any return on his investment.
The company’s likelihood of survival before the drug is approved
The investor should consider how stable the company is and how much it is likely to survive before the drug is approved by the relevant authorities so as to start generating any revenue. As an interested investor, you can go through the company’s cash books backward into several years and determine its rate of decline over the years. If the company is up to some tough financial crisis, it may resort to raising cash from other costly ways that may further threaten the return on your investment.
The possible revenue from the sale of the drug if it succeeds
You need to conduct some research on the approximate size of the market (number of patients), the competition in the market and possible annual sales should the drug succeed. A good investment should be a drug that the biotech has partnered with a huge marketer, as this indicates great confidence in the drug. This is a sign of a big imminent success.
All in all, the success of an investment in biotech is a factor of the above issues and others that may not be within the control of the investor like sudden competitors’ activities and government interventions that may promote or curtail the success of the drug.