The Meb Faber Show - Better Investing The Biotech Rebuild: Finding Alpha After the Drawdown with Chris Clark | #606
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Nov 11, 2025 Chris Clark, a seasoned biotech investor and former portfolio manager with over two decades of experience, dives into the intricacies of the biotech sector. He discusses its unique capital-intensive nature and the challenges investors have faced in recent years. Chris explores how AI can revolutionize drug development and contrasts private versus public biotech funding. He also sheds light on global market dynamics, particularly China's role. A standout moment is his recounting of a notable investment win, showcasing the potential rewards in this volatile field.
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Biotech Is Its Own Long Cycle Sector
- Biotech is a distinct, highly diverse sector focused on advancing products from hypothesis to market over very long capital-intensive cycles.
- Successful drugs face scientific, regulatory, and commercial risk which compounds over 8–15 years and can cost ~$0.8–2 billion per approved product.
Drawdown Driven By Rates Not Science
- The recent biotech drawdown was macro-driven, primarily by rising interest rates and a prolonged risk-off regime, not worse science.
- 2021's liquidity surge and subsequent rate hikes created a multi-year bear market in biotech distinct from past shorter corrections.
Calculate Expected Value Like Poker
- Evaluate biotech investments by expected value: estimate payoffs if successful, cost to participate, and loss if it fails.
- Focus on reward-to-risk and likelihood of success rather than treating names as lottery tickets.
