Five best biotech bets

Biotech companies are a high risk. but with several poised to license potential blockbuster drugs, the sector is worth watching.

Biotech companies are "high risk", says Susanna Twidale in Shares magazine. Historically, of products entering pre-clinical trials, only 29% reach Phase I. As a result, licencing deals at a propitious moment in a drug's development (usually after some "solid" Phase II data has been collected) can literally "make or break" a struggling young biotech firm. There have been "relatively few" deals so far this year, but that is set to change in the second half, "with several companies poised to license potential blockbuster drugs".

One of the more interesting is Plethora Solutions (Aim: PLE, 199p), which is hoping to attract licensing for its lead product, PSD502, for premature ejaculation (PE). Its only other rival, an oral treatment being developed by Johnson & Johnson, was rejected by the FDA last year. Apparently, 29% of men suffer from PE, compared with only 10% for erectile dysfunction, potentially making PSD502 bigger than Viagra. Yet Plethora's current share price values the whole company at less than £51m.

Other companies potentially worth watching include Alizyme (AZM, 137p), Phosphagenics (Aim: PSG, 10.75p), Ark Therapeutics (AKT, 91p) and Ardana (ARA, 128p).

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