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Joe Duarte: This is revolutionizing the war on cancer

By Investing Daily Analysts on June 6, 2016

The following is an interview with Dr. Joe Duarte, a medical doctor and veteran investor with decades of experience in the biotech sector. We sat down to discuss recent developments in immunotherapy.

Let’s talk about the crossover between medicine and investing. I understand that you literally wrote the book on biotech investing?

It’s true, I wrote one of the early books in how to successfully invest in the biotech industry. Again, this was very early on, before anyone knew very much about what to expect. A lot has changed since then, and the book is no longer in print.

But most of the predictions you made about biotech investing came true?

So this particular book covered the late 1990s, and so back then a lot of the focus was on the human genome. And certainly a lot of the projections that I made in the book ended up coming true.

For example, a lot of the companies that we were considered to be biotech startups at that time have since become leaders in pharmaceuticals. A notable example is Amgen—I spotted it when it was still small and unknown, and now it’s a major multi-billion dollar company.

I also predicted that there would be a unique trend in biotech acquisitions. I said that most innovations come from small companies with a narrow focus and no distribution… and then that these small companies would be purchased by larger companies with the means to bring the product to market. This is exactly what happened.

I showed investors how to identify which small companies could earn a windfall when they were acquired.

My criteria for assessing these small companies were right on-point for the time. As the industry has developed, so have my criteria—so I’m doing the same thing today but with tools built for today.

What type of small biotech companies are you looking at today?

Well, there are a number of big things that are going on right now. But immunotherapy for cancer—also known as immuno-oncology—is an area that shows particular promise. That’s especially true for investors since a lot of these therapies are just now coming to market.

Recently early Facebook investor Sean Parker, as well as the Bill and Melinda Gates Foundation, announced investments in immuno-oncology. Why is there so much optimism around this approach to cancer treatment?

Well, cancer immunotherapy is a big deal because it uses the body’s own defense system to kill cancer cells. There are two especially notable things about immunotherapy that other treatments can’t offer. Number one, according to many of the lab studies, success rates are so much higher than anything else. Number two, the side effects are minimal, because it is using and amplifying the body’s own defenses. That’s a godsend, especially when compared with treatments like chemotherapy that have terrible side effects.

You said earlier that many of these therapies are just coming to market—for those who might be new to the biotech world, can you explain how “coming to market” works?

Yes, FDA approval essentially determines the winners and the losers, especially from an investing standpoint.

That’s because companies often spend up to 10 years in trials for a single product. A lot of money and effort goes into this and it’s all for that FDA approval. It’s all about the FDA agreeing this product does what it says, and is safe to go to market.

The good news is that even small companies are capable of this—but it’s a matter of sustainable business practice and maintaining healthy balance sheets.

Do you have your eye on any biotech stocks that are close to FDA approval?

Yes, I do. Including a stock with an immunotherapy that recently received special “fast track” status from the FDA.

But finding companies like this takes a lot of research. I spend a lot of time looking at the numbers and the science behind an emerging treatment. If I have a question, I call some of the people that I know that they may have a better idea or can help me understand better.

And I spend a lot of time researching these companies.  From an investment standpoint, a strong balance sheet and viable product line are the most important.

It’s also about companies that have what it takes to survive multiple rounds of trials, and then getting the FDA approval.

I’ve been around the biotech space for a long time, almost from the beginning, and so I know exactly what to look for. I also have a feel for where the larger science is, and then how this individual treatment will fit into that.

You, of course, want to get into these stocks with realistic expectations, and you want to have an accurate understanding of the time horizon.

But these are definitely the most exciting and profitable stocks in the world. 

Editors Note: To learn more about a specific biotech company Dr. Joe and the analyst team at Breakthrough Tech Profits are recommending, watch this presentation. Due to an important announcement expected any day now, this stock could make large moves higher at any moment.

 


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