Is biotech “one of the biggest money-losing industries” of all time?

For every successful company like Amgen, there are many more biotechs that never make it or take huge amounts of time and money before they do. 

New York Times has the story of Xoma, a 25-year-old biotech that has never earned an operating profit or marketed a drug of its own.  Xoma has managed to burn through more than $700 million raised from investors and other pharmaceutical companies.

Much of that is explained by the fact that investors are willing to keep underperforming biotech companies on life support because they are looking for the rare hit that will make them rich — or even a stock that can rise modestly.

“These biotechs never die,” said Samuel D. Isaly, managing partner of OrbiMed Advisors, an asset management company that invests heavily in the sector. “They just find someone else they can convince or someone else who likes Kool-Aid.”

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