Good biotech funds

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
JC565
Posts: 50
Joined: Wed Jan 03, 2018 1:07 pm

Good biotech funds

Post by JC565 » Thu Aug 02, 2018 11:09 pm

I'd like to invest in biotech companies. Can anyone suggest a good fund that isnt to deep into experimental/risky companies? Im thinking something more long term and steady. I don't know who is who in pharma world but I do know genetics are the big focus these days

boglerdude
Posts: 616
Joined: Fri Jul 10, 2015 1:28 am
Contact:

Re: Good biotech funds

Post by boglerdude » Fri Aug 03, 2018 1:24 am

IBB is the largest and oldest. Why did biotech go nuts around 2012?

http://quotes.morningstar.com/chart/etf ... 2%3A955%7D

minimalistmarc
Posts: 256
Joined: Fri Jul 24, 2015 4:38 pm

Re: Good biotech funds

Post by minimalistmarc » Fri Aug 03, 2018 2:08 am

JC565 wrote:
Thu Aug 02, 2018 11:09 pm
I'd like to invest in biotech companies. Can anyone suggest a good fund that isnt to deep into experimental/risky companies? Im thinking something more long term and steady. I don't know who is who in pharma world but I do know genetics are the big focus these days
They’re in the broad index so you will already be investing in them. Buy the haystack, not the microscopic needle

User avatar
ReformedSpender
Posts: 149
Joined: Fri Mar 16, 2018 1:24 pm
Location: Stone's Throw from Vanguard

Re: Good biotech funds

Post by ReformedSpender » Fri Aug 03, 2018 8:16 am

Biotech is high risk/high reward, and personally, consumes WAY too much time to keep up with due diligence on investing in the right drug or company. The odds are against you when picking individual companies so you would be taking the right approach by looking at a broader scope.

IMO, if you'd like to tilt toward this sector, look into Vanguards Health Care ETF (VHT) or Health Care Fund (VGHCX). Both are up roughly 30 and 25% respectively since pre-election lows in 2016 when Rx pricing was criticized.

:beer
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

NoRegret
Posts: 36
Joined: Sat Dec 16, 2017 2:00 am
Location: California
Contact:

Re: Good biotech funds

Post by NoRegret » Fri Aug 03, 2018 9:02 am

Don’t have domain knowledge but I find CRSP facinating — the gene editing tech, not the company.
As mentioned $IBB for established companies, $XBI if you want an oomph, $LABU for the fix.

Disclosre: Short $XBI puts

NR
Market timer targeting long term cycles -- aiming for several key decisions per asset class per decade

Theseus
Posts: 425
Joined: Sat Jan 23, 2016 9:40 am

Re: Good biotech funds

Post by Theseus » Fri Aug 03, 2018 9:09 am

I have some aggressive money in FBIOX and VHT. They both have done well for me. FBIOX is more of a bio-tech type fund. VHT is more of a health care.

User avatar
LiveSimple
Posts: 1065
Joined: Thu Jan 03, 2013 7:55 am

Re: Good biotech funds

Post by LiveSimple » Fri Aug 03, 2018 9:12 am

Look at XBI as well at https://us.spdrs.com/en/etf/spdr-sp-biotech-etf-XBI
SPDR® S&P® Biotech ETF

User avatar
indexfundfan
Posts: 2163
Joined: Tue Feb 20, 2007 11:21 am
Contact:

Re: Good biotech funds

Post by indexfundfan » Fri Aug 03, 2018 9:19 am

I have an allocation in biotech ETFs since 2014. These funds are a lot more volatile than total market funds.

The reasons why I hold them are

o Extremely low dividend yield of just around 0.25%. Plus the dividends are "qualified income". These funds are good for minimizing income since the returns are mostly in capital gains. You control when you pay capital gains tax (if you sell).

o Provides plenty of TLH opportunities.

I generally hold IBB and XBI in the taxable account but sometimes I would have FBT or PBE in my Roth IRA during the TLH process.
My signature has been deleted.

xenochrony
Posts: 39
Joined: Mon Mar 26, 2018 11:24 pm
Location: California

Re: Good biotech funds

Post by xenochrony » Fri Aug 03, 2018 10:29 am

As compared to health care and/or the pharma sector, biotech, by definition, is much more risky. There might be a small handfull of mega-corp biotechs that defy this assertion, but I'd say that >90% of all biotechs are very risky, each with only 1-3 shots on goal (high quality preclinical/clinical candidates).

If you want to increase your biotech exposure, a more balanced health care fund, that includes some biotech might allow you to dial down risk somewhat. As others indicated, FBIOX, IBB, and VHT are good funds.

JimmyJammy
Posts: 137
Joined: Sat Oct 26, 2013 1:08 pm

Re: Good biotech funds

Post by JimmyJammy » Fri Aug 03, 2018 2:57 pm

PRHSX is the best fund I own. And it's been that way for 14+ years.

lukestuckenhymer
Posts: 31
Joined: Wed May 30, 2018 11:53 am

Re: Good biotech funds

Post by lukestuckenhymer » Fri Aug 03, 2018 5:33 pm

Theseus wrote:
Fri Aug 03, 2018 9:09 am
I have some aggressive money in FBIOX and VHT.
I invested in FBIOX coming off its unbelievable performance in 2014-2015, and a few months later it crashed about 45%... Just finally recovered this year. Never again! :beer

daveydoo
Posts: 1538
Joined: Sun May 15, 2016 1:53 am

Re: Good biotech funds

Post by daveydoo » Fri Aug 03, 2018 5:53 pm

JC565 wrote:
Thu Aug 02, 2018 11:09 pm
I'd like to invest in biotech companies.
Eh. I learned this lesson the hard way -- many years ago at the dawn of biotech. I'm also very familiar with this industry. I made "a lot of money" as a much younger man (think low five figures)...and lost it all in the blink of an eye.

Here's the problem with billion-dollar drugs: someone has to pay for them. Have you been following, um, current events? :D
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

Theseus
Posts: 425
Joined: Sat Jan 23, 2016 9:40 am

Re: Good biotech funds

Post by Theseus » Fri Aug 03, 2018 5:59 pm

lukestuckenhymer wrote:
Fri Aug 03, 2018 5:33 pm
Theseus wrote:
Fri Aug 03, 2018 9:09 am
I have some aggressive money in FBIOX and VHT.
I invested in FBIOX coming off its unbelievable performance in 2014-2015, and a few months later it crashed about 45%... Just finally recovered this year. Never again! :beer
I think I invested in late 2013 or in 2014. And since I am buy and hold guy, I stayed put. I just don't know when to get out. May be that's a good thing :sharebeer

ThePrince
Posts: 337
Joined: Sun Aug 20, 2017 9:15 pm
Location: U.S.A.

Re: Good biotech funds

Post by ThePrince » Fri Aug 03, 2018 11:07 pm

PRHSX and XBI.

Valuethinker
Posts: 35624
Joined: Fri May 11, 2007 11:07 am

Re: Good biotech funds

Post by Valuethinker » Sat Aug 04, 2018 6:53 am

daveydoo wrote:
Fri Aug 03, 2018 5:53 pm
JC565 wrote:
Thu Aug 02, 2018 11:09 pm
I'd like to invest in biotech companies.
Eh. I learned this lesson the hard way -- many years ago at the dawn of biotech. I'm also very familiar with this industry. I made "a lot of money" as a much younger man (think low five figures)...and lost it all in the blink of an eye.

Here's the problem with billion-dollar drugs: someone has to pay for them. Have you been following, um, current events? :D
My impression is that is not the issue. A genuinely novel therapeutic for a type of cancer or other disease is worth billions and big pharma will either license it or buy the company. Such drugs are not under price pressure. Look at Gilead and hepatitis B.

Price pressure is actually in the existing staple drugs. That big pharma owns and will be going off patent.

The problem is in genuinely novel therapeutic. Such are very rare. Most drugs fail in trials. It's just very low probability of success.

Biotech stocks are the equivalent of buying call options way out of the money. Where the time value is when they run out of cash.

Valuethinker
Posts: 35624
Joined: Fri May 11, 2007 11:07 am

Re: Good biotech funds

Post by Valuethinker » Sat Aug 04, 2018 6:58 am

He should mention the concept of right skew returns.

These are lottery tickets. For every Gilead there are many failures. Oneis buying an option for success

The possibility of 1000x or 10000x upside justifies investing in what is, on average, a losing bet. They make tech VC investing look predictable and low risk.

The option premium moves in and out. Up when there is a massive new therapeutic that reaches market. Down when there is a dearth of good news and real interest rates are rising.

The trick is to buy in to the portfolio when the premium is low and sell when it has risen.

jayk238
Posts: 436
Joined: Tue Jan 31, 2017 1:02 pm

Re: Good biotech funds

Post by jayk238 » Sat Aug 04, 2018 7:00 am

NoRegret wrote:
Fri Aug 03, 2018 9:02 am
Don’t have domain knowledge but I find CRSP facinating — the gene editing tech, not the company.
As mentioned $IBB for established companies, $XBI if you want an oomph, $LABU for the fix.

Disclosre: Short $XBI puts

NR
Crsp is losing interest amongst the texhnical intelligentsia. Its less useful.

JC565
Posts: 50
Joined: Wed Jan 03, 2018 1:07 pm

Re: Good biotech funds

Post by JC565 » Sat Aug 04, 2018 8:23 am

Thanks for the advice folks. I think I am going to go with the TRowe Price fund. Im not interested in directly investing in risky companies, or doing much leg work, but i do believe some significant medical advances are close (5 - 10 years).

thanks again.

daveydoo
Posts: 1538
Joined: Sun May 15, 2016 1:53 am

Re: Good biotech funds

Post by daveydoo » Sun Aug 05, 2018 2:35 am

Valuethinker wrote:
Sat Aug 04, 2018 6:53 am
daveydoo wrote:
Fri Aug 03, 2018 5:53 pm
JC565 wrote:
Thu Aug 02, 2018 11:09 pm
I'd like to invest in biotech companies.
Eh. I learned this lesson the hard way -- many years ago at the dawn of biotech. I'm also very familiar with this industry. I made "a lot of money" as a much younger man (think low five figures)...and lost it all in the blink of an eye.

Here's the problem with billion-dollar drugs: someone has to pay for them. Have you been following, um, current events? :D
My impression is that is not the issue. A genuinely novel therapeutic for a type of cancer or other disease is worth billions and big pharma will either license it or buy the company. Such drugs are not under price pressure. Look at Gilead and hepatitis B.

Price pressure is actually in the existing staple drugs. That big pharma owns and will be going off patent.

The problem is in genuinely novel therapeutic. Such are very rare. Most drugs fail in trials. It's just very low probability of success.

Biotech stocks are the equivalent of buying call options way out of the money. Where the time value is when they run out of cash.
That's fair. These are all good points. There may be no one to buy the actual drugs but as long as some greater fool buys your company, things may be OK for 5 - 10 years. The new Hep C drugs have been amazing -- but they are already running out of folks to cure.
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

Valuethinker
Posts: 35624
Joined: Fri May 11, 2007 11:07 am

Re: Good biotech funds

Post by Valuethinker » Sun Aug 05, 2018 7:19 am

daveydoo wrote:
Sun Aug 05, 2018 2:35 am


That's fair. These are all good points. There may be no one to buy the actual drugs but as long as some greater fool buys your company, things may be OK for 5 - 10 years. The new Hep C drugs have been amazing -- but they are already running out of folks to cure.
I don't think that's true re Hep C? The global incidence of this disease is absolutely huge. Due to contaminated needles arising from vaccination programmes (in Emerging Markets, they don't use single use needles, that's too expensive, and proper decontamination may just not happen), Egypt has something like a 40% incidence I think I read?

But it's also a lot higher domestically than we know. Given the ineffectiveness of the medication up to now, there's been no incentive to report it or investigate it - in the USA it might make you uninsurable? Also the sorts of most affected groups will be the socially marginal in all our countries. And who wants to know they have a much higher probability of dying of liver cancer?

This is one of those diseases that is absolutely endemic. Like syphilis and gonorrhea, herpes, HPV* etc. Call it the Background Radiation of human society and social interaction.

I also read the Hep C treatment may not actually be a cure. Eliminates the symptoms, but the virus is still resident. Something I read, and have not investigated.


* HPV is now vaccinate-able. However it would require pretty much 100% vaccination of both male and female teenagers (the former can get some diseases, but the worst one, cervical cancer, does not affect them - however they do carry the disease) to stamp it out-- as was dine with smallpox and polio. For social and political reasons, that's not likely to happen in a hurry.

daveydoo
Posts: 1538
Joined: Sun May 15, 2016 1:53 am

Re: Good biotech funds

Post by daveydoo » Sun Aug 05, 2018 12:36 pm

Valuethinker wrote:
Sun Aug 05, 2018 7:19 am

But it's also a lot higher domestically than we know. Given the ineffectiveness of the medication up to now, there's been no incentive to report it or investigate it - in the USA it might make you uninsurable? Also the sorts of most affected groups will be the socially marginal in all our countries. And who wants to know they have a much higher probability of dying of liver cancer?
Many big health plans routinely test everyone for hep C (the VA does for sure). There have been decent treatments available for decades (interferon and ribavirin) with maybe 50% efficacy. The new direct-acting antivirals have been game-changers since they are better tolerated, are effective across a wider range of virus "genotypes," and have 95% cure rate (ish).

Yes, there is an enormous untapped "market" in third-world countries for HCV treatment; however, they won't pay the $80K per treatment course that US insurers (sometimes) will. It's like HIV meds -- they end up being compassionate use in the non-lucrative markets. So the actual "market" for blockbuster drugs is pretty small, even if the number of "affecteds" is large.

And I totally disagree with the poster who said CRISPR is dead. It has not even gotten started. There is almost nothing you can't do with it. It may be limited by legality and by moratoria on germline manipulation, but China will do it for sure. The prior decades-old technologies, antisense and RNAi, are finally enjoying some clinical success (e.g., two separate examples in NEJM, July 5th of this year). So the fact that brand-new CRISPR -- which was touted in every newspaper and on every TV show in the country -- hasn't yet cured anything is not surprising.
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

User avatar
midareff
Posts: 5712
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Good biotech funds

Post by midareff » Sun Aug 05, 2018 12:57 pm

JC565 wrote:
Thu Aug 02, 2018 11:09 pm
I'd like to invest in biotech companies. Can anyone suggest a good fund that isnt to deep into experimental/risky companies? Im thinking something more long term and steady. I don't know who is who in pharma world but I do know genetics are the big focus these days
Awhile back I identified 65 sector and geographic funds which I have set in a separate mythical portfolio M* tracks for me. I periodically look at the top 20 on a momentum basis in a small play account. Fidelity Biotechnology (FBIOX) has yet to retake it's high from three years ago and appears very rarely to not at all in periodic momentum checks. I have zero interest in being in it .. even in a play account, at this time.

JC565
Posts: 50
Joined: Wed Jan 03, 2018 1:07 pm

Re: Good biotech funds

Post by JC565 » Mon Aug 06, 2018 7:06 am

daveydoo wrote:
Sun Aug 05, 2018 12:36 pm

And I totally disagree with the poster who said CRISPR is dead. It has not even gotten started. There is almost nothing you can't do with it. It may be limited by legality and by moratoria on germline manipulation, but China will do it for sure. The prior decades-old technologies, antisense and RNAi, are finally enjoying some clinical success (e.g., two separate examples in NEJM, July 5th of this year). So the fact that brand-new CRISPR -- which was touted in every newspaper and on every TV show in the country -- hasn't yet cured anything is not surprising.
I have read quite a bit about CRISPR. It's got potential, but its got a long way to go before it reaches that potential. They have found out that #1 it causes cancer due to its method of cell manipulation is some patients and #2 the human immunity to the carrier bacteria (which most of us have) also extends to the cas 9 protein. Making it almost ineffective since our immune system attacks the medicine. That said, there is lots of other "versions" of CRISPR with different proteins and carriers and what not. I think its got potential, but I feel like engineered T Cells have the best chance at making serious health improvements.

FYI, they have almost completely cured Children's blood born cancer like lukemia. I am willing to put money on it that is 95% eradicated in a decade.
Its also very interesting that our manipulation of the T cell, is based primarily from AIDS research. (read that as, the billions of dollars we've spent may be finally paying off) the method we use to "engineer" t cells. is almost the same one HIV uses to "infect" T cells. Basically we have taken the strongest part of HIV, its genetic modification of T cells, and turned it into a cancer fighter. Its amazing to me. Makes me wish I had gone down a different career path

Post Reply