Let’s be clear from the start here: I do not have any deep knowledge of biotechnology. Like most Americans, I find the sector both awe-inspiring and virtually incomprehensible. Names of cutting-edge drug candidates all look to me like they came out of a vaguely scientific random syllable generator. You end up with a ton of words like “bezalabub,” “anthrixistide,” “aducanumab,” or “sparsentan.” (Two of those words are made up, two of them are real.)
It doesn’t take very long, when looking at a string of names like that and the dense language around them, for a normal person to mentally tap out and stop paying attention. Yet as laughably impenetrable as biotech is, it is a magnet for very serious money…for good reason. Biotech promises lucrative miracles, like restoring sight to the blind, preventing cancer, and curing hepatitis C.
The shroud of complexity in the sector also conceals snake oil salesmen, shady practices, bad management, and shaky ideas. How does an ordinary investor tell the difference? Well, they can consult market analysts and read business media — although both have major limitations. Analysis that’s widely available to the general public is mostly of the Jim Cramer/“Mad Money” variety. And most mainstream business journalism is more of an agent of hype rather than a dismantler of it, at least until something big goes wrong.
Luckily, markets have their own predatory species that help prune the herd. Driven by an appetite for profit, they sort out the weak links and the naked emperors from the genuinely good investments and attack them mercilessly. As brutal and greedy as they may seem, these predators keep the business ecosystem in order. I’m of course talking about short sellers. And Martin Shkreli styled himself as a particularly voracious one.
