Investing in a biotech startup? What are some warning signs for bad investments? – MedCity News

What are some the red flags life science investors need to watch out for when funding biotech startups? Here are some of the most important ones

I think few things could be more rewarding than investing in a company that develops a cure or effective treatment for any of the hundreds of conditions that affect millions of people with no effective treatment. But finding the right company can be fraught with risk. That’s one reason why angel and venture investors have been allocating funds to later stage companies that carry less risk.

Luke Timmerman of Xconomy and David Sable, the portfolio manager for the Special Situations Funds, each compiled a handy list of red flags that should make prospective investors in startup life science companies pause. Here are six of them.

Results that can’t be reproduced This is one of the biggest problems with biotechnology companies in the early stages. A recent report published by Science drew attention to the issue. It said reproducibility and quality issues have been widely cited as barriers to drug development, according to the report. Timmerman refers to a study published in Nature, in which only 11 percent of results from 53 published biology papers could be reproduced. Other publications and reports have called attention to the issue (here, here and here).

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From Pharmaceutical Industry digital vision

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