Investing in biotech can be risky.
Small, publicly-traded companies, the fortunes of which are often tied to the success of a single drug in making it out of trial phases, are often prone to big price swings.
In a note to clients, ISI analyst Mark Schoenebaum highlights a chart of the number of biotech stock “blow-ups” each year since 1990.
“For purposes of this analysis, we have defined a ‘blow up’ as a one day downward stock move of 25% or more. We have defined ‘biotech’ as those biotech companies listed in the S&P 1500 and/or the Russell 3000 in any given year,” writes Schoenebaum. “If you look at the trend, it doesn’t look scary to me . . . . what do you think?”
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