Biggest not always best in biotech

A biotechnology industry expert says the belief that small biotech companies make poor investments is not always correct. Dr John Ballard undertook an analysis of 35 biotech companies which listed between 2000 and 2002. The microcaps – those with initial market capitalisations below $10 million – performed better than their larger peers. All 10 microcaps at least doubled their market capitalisations by the end of 2003. But the companies capitalised at more than $50 million after four months performed worse. Ballard said, however, that the microcap results did not mean they are succeeding, just that the market is happy with them. One reason for their more doubling in value could be that there was more room for upside after a low initial valuation, he said.