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BioTech Navigator, March 1998
continued from page 1, column 3
a promising drug or a flop, until it is
too late. So the best way to make
money on biotechnology stocks is by
building a portfolio.
By building a portfolio of biotech-
nology stocks, you can minimize the
risk and leave the reward intact -- if
you concentrate on companies with
key technologies rather than the hype.
A biotech company who owns a broad-
based technology that is rich enough
in its promise to produce multiple
products over time is the best bet. If
one product doesn't work out, the
stock will suffer a little, but the com-
pany will have enough packed into its
technology pipeline to recover. Since
an investor isn't chasing the hottest
drug of the day, the stocks going into
this portfolio will be cheap, and since
he isn't putting all his dollars into one
company, the portfolio will cut the
risk. Besides, having a pipeline of
good drugs is just as good having only
a blockbuster drug which a company
may be dependant on.
Using a portfolio to cut risk is a
time-tested strategy that's especially
well suited to investing in biotechnol-
ogy.
Buying a portfolio of companies
with strong technologies -- but as yet
no drugs -- is likely to earn you the
best return for the amount of risk
you've assumed. The reason: Since
Wall Street really doesn't know how
to put a value on basic science, a
biotechnology stock will stay relatively
cheap until it puts a drug on the table.
continued from page 1, column 2
them die. These infections are esti-
mated to result in approximately eight
million days of extended hospital stay
and account for more than $4.0 bil-
lion in additional health care costs
each year. But it's not just these hos-
pital infections. Remember the fast
food restaurant that accidentally sold
tainted hamburgers? Or, the restau-
rant chain that prepared meat adja-
cent to the salad table, resulting in the
spread of bacteria to the fresh salad?
Or, the company that sold unpasteur-
ized fruit juice? This list goes on.
The severity lies in the fact that com-
mon place bacterial infections now
lead to more serious disease. Remem-
ber the flesh-eating bacteria, where a
simple paper cut resulted in amputa-
tion of the arm of one unfortunate in-
dividual? Is this science fiction? No.
So how has this happened? The
answer is simple. Bacteria have now
acquired the ability to overcome some
of the commonly prescribed antibi-
otics, by either deleting a gene that
made them sensitive to the antibiotic,
or by acquiring a gene that allows
them to survive in the presence of the
drug. Bacteria have learned to adapt
to the environment that we have
placed upon them. But how? Two
reasons. The first is our need for a
strong food industry, which can pro-
vide abundant and healthy products to
our dinner tables. Some growers of
livestock commonly feed their ani-
mals with products fortified not only
with vitamins and minerals, but also
antibiotics to keep them healthy. This
exposes bacteria to the antibiotics
early on in the food chain, and allows
them to acquire resistance before a
chance meeting with humans. Sec-
ond, when our children get sick, we
go to the physician's office and insist
on they prescribe antibiotics to facili-
tate their recovery, even though they
may not need it, for example, when a
patient gets antibiotics for a viral in-
fection such as a flu or cold. This can
lead to the killing of the natural popu-
lation of bacteria in our system, and
allow the multiplication of resistant
bacteria. Additionally, when patients
should take antibiotics, they some-
times discontinue taking their medica-
tion, even though they have not taken
the full course. This allows bacteria
that have not yet been killed to sur-
vive and develop resistance leading to
what are now called antibiotic-
resistant "superbugs".
A classic example of this was doc-
umented in Hungary during the
1980s. During that time, the country
was highly dependent on penicillin
for treating infections. However, this
overprescription quickly led to peni-
cillin resistance in greater than 50%
of the bacterial infections. If not for
the surveillance by Public Health In-
stitute in Hungary, this could have
gotten even worse. Now physicians in
Hungary have altered their prescrib-
ing practices and the incidence of
penicillin resistant bacteria has de-
creased.
Of considerable concern is the de-
velopment of vancomycin-resistant
Enterococcus and
Staphylococcus au-
reus (Staph) and erythromycin-
resistant
Streptococcus. Ery-
thromycin has long been a mainstay
in the treatment of a broad range of
infections, particularly in children,
while vancomycin was for years the
only drug effective for certain serious
infections in hospitalized patients.
Recently, strains of Staphococcus and
Enterococcus have appeared in the US
and in other parts of the world that
are resistant to vancomycin. This is
considered a dangerous situation, as
Enterococci are normal inhabitants of
the gastrointestinal tract and Staph is
common and virulent. Both are recog-
nized as important hospital-acquired
pathogens. Erythromycin resistance
in Streptococcus is of equal concern.
Resistant bacteria detected in blood
culture increased by 20% between
1988 and 1990, while resistant bacte-
ria in pus isolates and throat cultures
increased by 20% and 13%, respec-
tively, from January to December
1990.
State of the US antibiotic
market
Today there are more than 100
antibiotics on the market, with many
more in development. But these new
