The Fear of Penny Stocks

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Biotechnology and pharmaceuticals is an interesting industry, if you are a professional in Pharma, you understand that tremendous wealth has been made. Creating new billionaires by treating diseases but it also has an ugly side, where many lose their wealth. Let’s look at Vital Therapeutics, a biotech company that some believed had a promising drug candidate awaiting for approval. Overnight, the news broke out that the company’s phase III drug candidate flop. Within 24 hours (more like 3 hours), the company stock drop from 6 dollars a share to 50 cents. Talk about a rough night.

I like to be in the winner side but there is no guarantee that the company will succeed without an IP and an approval by the FDA. Think of the FDA as a mega million lottery ticket, where there is an opportunity to play with the bigger fishes in pharma like Roche, Gilead, and Amgen. Where this lottery ticket can make you millions, but for others, billionaires.

Like a roller coaster, it is a ride that has its high and downs. As a biotechnology nerd and professional, I research companies like Amgen. I study their track record and see if there is any patterns for their success but it’s difficult to predict it.