This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Biotech Stock Mailbag: Bio-Hazards

BOSTON ( TheStreet) -- The accumulated deficits of Telik (TELK), Xoma (XOMA - Get Report), Genta (GNTA), Cell Therapeutics (CTIC - Get Report), Discovery Labs (DSCO) and Cel-Sci (CVM) total $4.6 billion.

Think of the good all that money could have accomplished had it been invested in real medical research.

Investment capital is a precious resource, so it shouldn't be wasted on drug and biotech companies that have proven their incompetence over years, even decades. Somewhere between 300 and 400 publicly traded biotech companies operate in the U.S. today. That's way too many. I'd venture to say we could cut that roster in half, at least, and not suffer any negative effects. In fact, the money saved by not investing in the laggards could be pumped into a smaller number of biotech firms worthy of support. That would help the sector, not hurt it.

The biotech sector needs a chopping-block equivalent of the Judge's Table from the reality TV show Top Chef. At least once a year, a group of companies representing the biotech sector's perennial loser losers would face elimination by a panel of objective and steely eyed judges. After listening to these bio-bums confess their crimes against good medical research, the judges would force one or more of them to shut down permanently. Any cash and assets remaining would be sold off and returned to shareholders.

I nominate myself chief justice.

"Xoma, pack your test tubes and go."

"Cell Therapeutics, Genta, put down the beakers and scram."

Lest anyone get the wrong idea, I'm not criticizing failure. Drug development is risky, so some (even most) drugs that seem promising early will blow up late. Smart, successful drug development is often borne from failure. Genentech wouldn't have developed Avastin or Herceptin without setbacks and clinical trial failures; the same goes for Human Genome Sciences (HGSI) and Benlysta.

A phase III study that goes kaboom doesn't automatically warrant a spot at the biotech Judge's Table. What does is an unbroken string of clinical trial failures, multiple FDA rejections, broken promises, unchecked shareholder dilution, general bamboozlement and a management philosophy that views a corporate balance sheet as an executive ATM machine.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CTIC $0.44 -6.80%
CBLI $2.17 11.28%
CYCC $0.38 4.74%
XOMA $0.76 -3.60%
VNDA $8.49 0.95%


Chart of I:DJI
DOW 17,667.29 -83.62 -0.47%
S&P 500 2,052.95 -10.42 -0.51%
NASDAQ 4,733.5580 -29.6660 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs