Whether you’ve decided to take notice, the biotechnology sector is rapidly evolving from the roll-of-the-dice gamble that it was in the early 2000s to an investor’s paradise. Better venture capital funding, vast improvements in clinical testing and drug development technologies, faster FDA approvals, and considerable amounts of cross-corporate collaboration have made the biotech sector a stomping ground for investor dollars.

However, take note that I didn’t say “trader’s dollars” — because there are numerous ways you can minimize your risk by investing in the biotech sector without sacrificing long-term gains. Here are three primary ways to reap the rewards of biotech without assuming the all-or-nothing misses often wrongly associated with the sector.

1. Target established biotechnology companies.
This one probably goes without saying, but by purchasing established biotechnology companies with actively growing pipelines, you tend to eliminate a lot of the downside risks associated with one-hit wonders.

Affymax is the perfect example of why biotech investors want to do their homework before investing. Even before its anemia drug Omontys was voluntarily recalled because of a number of deaths and hypersensitivity issues associated with the drug, it should have raised red flags to shareholders. Omontys was Affymax’s only approved drug, and it was being utilized as a combination therapy in its only other two clinical trials. Essentially, it was Omontys or nothing for Affymax — and in turn since the recall, its share price has gone from more than $20 to practically nothing!

Instead, I would encourage prospective long-term investors to turn to biotech companies with plenty of established drugs already on the market that also have numerous blockbusters plainly visible in their pipeline. I believe both Celgene and Gilead Sciences perfectly fit this bill.

Celgene’s superstar has been cancer drug Abraxane — which was first approved to treat metastatic breast cancer in 2005, but has been piling up additional indications and positive test results rapidly as of late. Abraxane added the indication of advanced non-small-cell lung cancer treatment in October, and, just a month later, Celgene noted that Abraxane when combined with Eli Lilly‘s Gemzar helped improve survival rates in patients with pancreatic cancer. On top of this, Celgene announced in January the possibility that it could double revenue and triple profits, organically, by 2017! Considering a multitude of possible new indications for Abraxane, the approval of Pomalyst for advanced multiple myeloma, and the potential for Apremilast to be approved for treating psoriasis, Celgene’s future as a long-term investment looks bright.

The same can be said for Gilead Sciences — which has a wide-reaching portfolio of products targeting cardiovascular and liver diseases, but headed most prominently by its established HIV/AIDS drug program. The scary thing is that Gilead’s pipeline could be the most robust of any biotech company. Stribild, the company’s new entirely in-house all-in-one HIV medication, was approved in August and will soon replace Atripla. Also, Sofosbuvir, the company’s experimental oral hepatitis-C …read more
Source: FULL ARTICLE at DailyFinance