Elemer Piros, a research analyst at Rodman & Renshaw, is more bullish on Neurochem ( NRMX) and its Alzheimer's drug Alzhemed than I was in my
My email inbox filled quickly with comments about my bearish
Responding to my
Wondering if there is a relatively quick way to estimate the potential market for these drugs? It may not be worth the time to perform the medical analysis on the findings if the potential market is too small. Or can we assume that any cancer drug will have a sufficient potential market?I wish there was an easy answer to G.C.'s question, but there isn't. Getting access to sell-side research is probably the quickest path to learning about the commercial potential for any biotech company and the drug it's developing. If that's not possible, you can do a rough calculation yourself. The National Cancer Institute maintains a statistics page that provides information on the number of people diagnosed with, or who die from, cancer annually. Drug pricing is a trickier variable, but as a ballpark estimate, targeted, biologic drugs (a.k.a. "biotech cancer drugs") can cost between $2,000 and $10,000 per month. (You can see why cancer is such a big focus for biotech companies.)
Another reader, R.T. (he's an M.D. and Ph.D), comments on the same column:
The homework you are describing is clearly what a diligent scientist should do for comparing the efficacy of different treatments. As you point out, this may not be easy even for scientists and may take time, as available data may be contradictory, insufficient or even wrong. Conclusions might be hard to draw even after data have been published in top medical journals. That is science. It just take a lot of time to reach definitive answers. So, I think this kind of "homework" is clearly impractical when it comes to deciding where to put your money, especially if you are screening a few hundred biotech companies, their products and their press releases. As a scientist and private investor in the biotech world, I prefer to follow the "expectation" potential of new products rather than their proved efficacy and, of course, technical indications of buying/selling pressures.Thanks for the feedback, R.T. The method I described to dig into biotech research is certainly not the only way, and it may not be the best way for everyone. I know biotech investors who don't know an antibody from an atom but rely on charts to do their buying and selling. Bottom line: Go with whatever works for you. But of course, please keep reading here.
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