The connection here is not as tenuous as you might think.

Mr. Bonds has been accused -- with a great deal of anecdotal evidence and by witnesses with increasing verisimilitude (I have always wanted to use that word, finally got it in print!) -- of using science to boost his performance. Doubters, in my mind, fall somewhere between liars and morons. It is almost inconceivable foreign molecules were not altering Mr. Bonds performance, for the better, for several years. It is, however, at this time, technically, speculation.

Someday, performance enhancing drugs a la Bonds (again, unproven) will be legal and common. But not now, and this is why Bonds has become a pariah outside of San Francisco, as well he should be.

I love baseball. I am a purist and a prude about many it as with many things -- and while he did not technically violate any baseball rules by using drugs (if he did), he did violate baseball rules by buying illegal steroids (if he did). It's a felony, which, obviously, violates baseball rules.

And for this reason he will break Hank Aaron's record, but when he lays down his bat, either to retire or go to jail for perjury or tax evasion or lying to a federal law enforcement or a combination of all three (speculation, mind you), he will be forgotten, a freak of history leaving no legacy behind himself except new rules to help pro sports combat steroid abuse.

So be it. But the case of Barry Bonds is important for biotech because it raises a very critical ethical question that drives drug development, right now. Should companies be developing performance enhancing drugs? The question, my friends, is moot - they already are doing so, big time!

Are you shaking your head? Every hear or Ritalin or Adderall or perhaps Concerta?

These drugs manage attention deficit disorder, hyperactivity and related maladies that are increasingly common and increasingly diagnosed in teens and adults. Because the issue here is academics and brainpower and training future citizens, that makes performance-enhancing drugs are just fine.

Of course, as in baseball and other sports, the real issue is usage by people who do not need the drugs, but simply want an edge. In the case of these drugs, many children get them not because of the extremity of their own problems, but because the needs and failures of their school systems - and parents.

The current structure of schools, classrooms and curriculum cannot meet the needs of the students who have an attention disorder problem. So, because our institutions of learning are radically inflexible, we drug our children. Makes sense to me, doesn't it to you?!. By the way, a great knock on these drugs is found in mystery writer Jonathan Kellerman's first book, When the Bough Breaks -- and Kellerman is a child psychologist.

I write from the experience of someone who has watched children take these drugs - for some, it is just to get an edge, for others it is necessary. And these drugs, like steroids for baseball players, work and work well, and improve their academic performance, their learning and their self esteem. In many cases they provide an invaluable boost to the experience of childhood.

My concern is about overuse and wrong-headed use. But no matter how we use them, they are performance-enhancing drugs that alter what nature or God has done to the child's internal programming. And in that sense, steroids, growth hormone and other performance enhancing drugs for physical performance, do the same.

Let's have some fun: Imagine if Sparta had beaten Athens and Spartan-type rule had evolved for 2500 years, so that our children were brought up as Spartans. They would not be taking Ritalin but Human Growth Hormone, not Adderall but the "clear and the crème" maybe branded as Bonds Magic (just speculation). They would also be bi-sexual, at least the men serving as soldiers - and the children would be raised communally.

My point? The baseball issue is not that Bonds may have used a performance enhancing drug - the issue is he cheated if he did so and committed a felony.

For the rest of us, the issue about performance enhancing drugs is simple: They will continue to evolve in sophistication, safety and usage until one day these physical boosters enter the mainstream like Ritalin and all its cousins.

Until that happens, is there an investment opportunity right now? Take a look at Shire Pharmaceuticals (SHPGY): It has a chart to die for, good survey results from ChangeWave, and an increasingly manic population of parents over-managing their children in every way -- even including giving them performance-enhancing drugs. I had to get some investment thoughts in here some place, right?

Biotechs, like most other stocks, have been blitzed this week (forgive the pun) as the subprime mortgage woes spilled into other credit markets and the equity market. But there were two indications that investors are not selling off the entire market and will pay for performance.

The first is Allergan (AGN) -- and this is a freebie as I recommend the stock in my newsletter -- is a great cosmetic medical company that leads most of the markets it plays in. It does facial aesthetics (Botox for the upper half of the face and Juvaderm for the lower half), breast implants, Lap Bands, dermal fillers and an entire product line for prescription eye care. And AGN beat estimates, raised guidance and the stock went up for two days despite the mortgage maelstrom that send most everything else down.

The second is Alkermes (ALKS) -- that's two freebies one one post, so consider this Christmas in August -- a great, revenue rich and profitable drug delivery company that currently makes most of its dough from Risperdal Consta, a one a month injectable schizophrenic drug marketed by Johnson & Johnson. They had very good numbers, and the stock was up more than 10% -- again, as the world bounced around them.

This is a very positive sign that biotech and life sciences companies that deliver, and are not subject to absurd whisper numbers (i.e., Palomar Medical, PMTI) will go up regardless of the market -- if they perform.

Speaking of the market -- is this a correction, a downdraft, a temporary glitch or the work of Death Eaters roaming far from Azkaban? (If you don't read Harry Potter, get with the program.)

It is, first and foremost, nervous investors taking profits in the face of a very volatile and increasingly unforgiving market - after all, some indices are, excuse me were, up more than 30% over the last 12-15 months. Investor fear is being driven by a re-pricing of risk: First, bonds backed by subprime mortgages; then bonds and Collateral Debt Obligations (CDOs - no time to explain, go to another blog or Wikipedia) backed by Alt-A mortgages; then bonds and CDOs backed by almost Alt-A mortgages; then regular mortgages and the attending CDOs; then bonds with lower credit ratings (often called junk) some with CDOs; then lower-grade commercial paper often used to finance private equity deals; then equity markets.

And, this all happens contemporaneously,

The spillover into equity markets was also driven by margin calls, as many bonds can be bought on 80%, sometimes 90% margin and that forced the liquidation of stocks to meet these calls.

And then, of course fear took over. Bear Stearns comes out and sings "Everything is All Right" (a song from Jesus Christ Superstar that presages what is to come in Gethsemane and beyond) -- except Bear Stearns' Judas was their CFO (who earns a lot more than thirty pieces of silver, I might add) who says it is the worst credit market in 22 years, and all hell breaks loose.

Does this cogent analysis mean the tumult is over? Hardly. Volatility is going to remain high, speculative biotechs will continue to take hits as the risk premium for owning these stocks continues to rise but good companies will be rewarded, sooner rather than later. So stick with good companies. Want to share some of your "good company" ideas with us?

I am preparing a rough draft of a survey the ChangeWave Alliance survey group will turn into a real survey on the topic of women's health. A little more than three years ago I absorbed the results of a similar survey, did some digging, found Hologics (HOLX), recommended it to clients of our institutional service and the stock has tripled since that time.

Why is women's health a separate topic for investors? There are specific products - from tests to treatments - targeted and tailored for the women's health market. Categories of procedures and treatments of interest to investors are:

• Breast cancer
• Osteoporosis
• Arthritis
• Cervical cancer
• Ovarian cancer
• Pregnancy
• Menopause
• Menstruation
• Birth control
• Pre-natal care
• Facial aesthetics
• Varicose veins
• Other body aesthetics
• Depression
• Obesity and weight management
• Sexual Dysfunction

You may be surprised by the depth of the list and may also ask why there would be different tests or treatments for the female version of something like arthritis. Well, in practice there are, regardless of the structure of clinical trials or FDA marketing labels or what have you. For example. arthritis treatments for women, in practice, are biased towards one set of treatments and pain killers.

The first place to invest is testing and diagnosis, from new forms of mammograms and bone density scans to advanced blood-based cancer tests.

Another strong market is facial aesthetics -- especially among younger women who want a "light" touch rather than major wrinkle repair or actual surgery.

A third segment to look at are new treatments in Phase II or Phase III trials for osteoporosis and cancer: breast, ovarian and cervical -- all of them still highly lethal.

Finally, If you look at osteoporosis, make sure the company has a large marketing partner with a presence among physicians -- something that's irrelevant for cancer treatments.

A note to ChangeWave subscribers: Keep an eye out for the survey results as they should be available before Labor Day.

Biotech stocks almost always evoke images of rapid riches -- 100% losses or the next great cancer drug. It is the same at Money Show seminars -- people say they are disciplined investors and yet many ask for a tip on the next 1000% gainer.

Heck, If I knew for sure, you'd find me eating baguettes and Camembert in my beach front cottage in Normandy -- with French-roast coffee of course.

My point is biotech stocks - and by that I really mean life sciences stocks, including genomics companies, diagnostic companies, generic drug companies and so on -- range from the conservative to the hyper-speculative. And for this reason, although I am not a registered investment adviser and do no manage money other than my own (which I do quite well, thank you, up 12.16% this calendar year including 10% in cash and 25% of my portfolio in high-yield stocks that are not suppose to appreciate too much), investors should have at least 15% of their portfolio in these stocks, probably 20%-25%, matching GDP and GDP growth for the next few years. I bounce around, as high as 50% last year to 33% around now due to other opportunities, two boys three years away from college and growing opportunities in real estate.

My point is there are stocks for everyone, not just the next great pre-clinical company that could go bust or go up 100-fold. This is where you should look:

Very Conservative: Companies with no exposure to science or regulators, just patients and revenues. For example, Wilfred Brimley's diabetes supply company (he is the ad man, not the owner), Polymedica (PLMD). A 20% plus grower with no scientific or regulatory risk.

Conservative: Generic drug manufacturers, business is good and going to be great in the next five years as all sorts of blockbusters with sales nearing $100 billion go off patent. Also, lots to choose from - look for a company with a business model that creates higher gross margins (the engine of growth). I have a favorite, you look it up, largest generic drug company in the world. A hint - it is based in Israel.

Growth: The solid growth companies with minimal risk are in, of all things, pet care and cosmetic medicine, often the same customers. These companies average 15% growth a year. The best pet company has the best symbol on the market - WOOF - Veterinary Centers of America - my first pick after 9/11. In October of 2001 pet sales went up 40%.

Aggressive Growth: These companies face some regulatory risk but also face 25% growth. Go for a disease that cannot miss - see how that guy next to you squeezes into the movie seat, ever seen a menu without the words JUMBO on it - go for diabetes.

Tobacco killed our parents, calories are killing us. Lots of diabetes companies to choose from - my favorite makes the first GLP-1 inhibitor to get approved by the FDA. Yup, still quiz time.

Speculative: We are now entering the traditional realm of biotech. Think cancer and other diseases without cures or great treatments. A wide variety of choices, all very complex and one reason why diabetes is a great choice for a disease to target with your money. Find cancer companies with late-stage (Phase III) drugs in trial for a form of cancer still very lethal and with a large marketing partner that will help them through the trial. Maybe a company in Phase II trials - mid-stage is riskier - if you have the stomach for it.

Las Vegas Investments: Be prepared to lose it all, ergo Vegas investments. Again, think cancer, but also Alzheimer's disease (AD). Any company in Phase II trials - and if they have a marketing partner paying for the trials, all the better.

You can go nuts and invest in a company that is only in Phase I trials. These are the 100-baggers, i.e., the $2 puppies that could become $200 mastodons. There are only a handful of AD companies, check out the Australian one with Phase II trials underway in Sweden.

Why am I being so coy? Because life sciences takes a lot of work - research and investigation, plus constant follow-up to catch problems when they arise. If you want to play in the biotech sandbox and are not willing to do the work, then you need to buy the information from a packaged-services or advice newsletter company.

Many other areas of investing -- such as my son's specialty based (accurately I might add) on what his friends are buying -- are easier to invest in if less remunerative. While everyone says the risk matches the reward -- and then some in life sciences -- the work does too. A little bit of work, and I mean an hour or two a week perusing Google, and your returns can go up dramatically.

See ya.

Something seemingly odd happened yesterday - while the markets took a terrific hit, driven by turmoil in the bond markets and the financial services segment of equity markets, biotech and life sciences companies did all right - some little guys that have been pounded in recent days actually moving up. The question is why?

The official answer is "who knows?" - but if you are willing to follow a logic trail some things pop up.

Risk - hot and otherwise speculative money is leaving homebuilding and financial services and ending up in speculative biotech. Not a great argument, but possible. This is a trading scenario - the short termers leave one area and move into another. That being said, volumes were not all that great yesterday in biotechs so this may had an impact but it was small.

Lack of Sellers - Again, a trading perspective, and this makes more sense. If your stocks have been whacked and the market is melting, do you want to throw in the towel when everyone else is? Given market conditions yesterday, many people hung on assuming it was not the kind of day to bail out.

The Economy - Investors and traders are beginning to believe the subprime mortgage mess, and the home building mess, is going to spill over into the economy. Forecasts for growth are being pulled in and news on retailers and a weak back to school season have people looking to find growth. And everyone knows the strongest trends in growth for the next generation will be in life sciences and biotech - the product side of health care.

What to do?

Assuming I am right, and investors are turning away from other speculative investments, including oil and energy, and are also turning away from slower growing parts of the economy, take another look at what you can put into aggressive growth stocks and think life sciences.

This post is not directly about investment - but read it anyway, I had a lot of coffee this morning and it shows.

Earlier in the week a Federal circuit court reversed a decision that would have allowed a dying woman - now dead - access to drugs not yet approved or rejected by the FDA. The legal logic was the FDA had the statutory authority to do so. The court seems to have forgotten a central underpinning of our Constitution, our legal system and, if you push back a bit, English common law - the natural rights of man, which, while not included explicit in the Constitution, are assumed in the Constitution, and this is the right to live.

An op end piece in today's Wall Street Journal covers the legal and constitutional side of this issue far better than I can - but I have been preaching about this longer than the guy form the Cato Institute - not a favorite of mine, but this was a good piece nonetheless, you should read it - and my concern here is the more tactical issue of drug approvals.

Simply put, if a patient is dying, and a drug has trial data that shows, with statistical certainty that it is safe, effectiveness should be measured by the patient's willingness to use the drug and eventually the marketplace. I am not talking Chinese herbal remedies here folks - I mean advanced cancer and other therapies rejected by the FDA because the arrogant scientists (that is a multi-syllabic phrase for morons) running many biotechs have screwed up their clinical trial design and process. Notice I am not blaming the FDA here 100% -- it is 50% -- an that really is the right number. My degree is in philosophy from Georgetown and I could design clinical trials better than more than half the biotechs I cover. But the 50% the FDA is responsible for is a regulatory pathway that puts far too much emphasis on statistics, ignores patients and is going the wrong way from the creative and innovative leadership of Dr. Mark McClellan, who left the FDA a few years ago and things have not gone right since.

Let the market decide - am I not a total, Cato Institute free market, screw the great unwashed, compassion has no role in society type - and it will. A cancer treatment may work for 5% of potential patients - and will probably fail in trial. Why should those 5, or 500, or 5,000, depending on the kind of cancer, die because of statistical metrics? What happened to Oliver Wendell Holmes (actually, a real nasty piece of work but a great writer and jurist) when you need him - I paraphrase here - "I would rather let a thousand guilty men go free than convict one innocent man?" (might have been a hundred, Google is slow today). How about the FDA saying "I would rather have one thousand patients waste some money and save one dying human soul." Or something like that. Actually one in a thousand is not practical.

Ah, here is the rub. The market really cannot be allowed to determine everything - there needs to be some reason in this - but right now all reason is thrown out the window by FDA statistical fascists who do not have the moral courage to take a chance, to stray beyond the fence of statistical certainty, to save a life. Let me brutal here - the staff decision to reject prostate cancer treatment Provenge, if it worked on just 10% of patients, will kill in one year twice as many Americans than have died in Iraq, showing Shia and the Sunnis the beauty of democratic government in a tribal society, since George the Light (his father was the real George or George the Heavy, a very fine public servant, independent of your views of his politics) began the war.

The solution? A streamlined regulatory pathway for drugs for the terminally ill that, if proven safe, can come to market based on efficacy data less rigorous than what is demanded today. And this will need to be put in place by force of law. The FDA staff is morally and professionally incapable of acting this aggressively to create its own regulatory pathway and will not be led by the current head of the FDA Andrew von Eschenbach. He is one of the most ineffective and reviled bureaucrats in all of Washington, just as we was when running the National Cancer Institute, the primary notch on his resume that landed him on the jobs his friendship with George the Light and being from Texas.

Did I wake up on the wrong side of the bed this morning? No, but if Provenge works on ten percent of patients, then a few more fathers and sons and husbands and heroes --- just like our boys and girls in Iraq - will not wake up at all this morning. Let us hope this circuit court decision, which is about a different drug entirely, is appealed to the Supreme Court and the great, fighting protectors of human life - who oppose abortion but are also ardent supporters of the death penalty - reverse this reversal in the name of the sanctity of any human life. And the power of the patient and the marketplace.

One of the great things and hosting a blog is the discipline it forces on you, not just to write, and read posts, but to stay fresh and keep reading even when lunch, sleep or a baseball game beckon. Vacation will soon be upon me - two weeks at the beach, a serious beach, not too many people or commercial establishments - and it is at that time I take a look at some "deep" research, at topics and magazine articles and papers about technology and molecules and dancing mice, not trying to make another discovery, but trying to find the market segment where the next great discovery is bound to happen.

And, in honor of the slowdown I enjoy the week before I leave, and also to avoid doing other things, like writing one of my two newsletters, I started a bit early this year. And what I have discovered it is not good - there is a real poverty of "almost there" research and product development in all the great areas of life sciences, and disease prevention and treatment, except cancer. And, even in cancer, it is mostly about incremental treatments a smidge better than what is on the market - that is the way to get an FDA approval, isn't it? - and a complete lack of a bold vision for curing cancer.

It would be easy to blame companies on this lack, but the real answer lies with Francis Bacon - Elizabethan spy, philosopher, statistician (such as it was back then), the man who gave us our current rules of scientific discovery and evidence - and the FDA. I cannot criticize Bacon, since a response is highly unlikely, but the FDA seems fair game. If you think I am being too obtuse or showing off, check him out at http://en.wikipedia.org/wiki/Francis_Bacon and start reading better books - put down those picture book biographies of Pamela Anderson and The Governator - although both are living testimony to the growth in the cosmetic medicine market.

Where was I? Oh, if you read all the postings in this blog - please, don't do it without stimulants - and my newsletters - I am typically a defender of the FDA. Or, let's say I was. More and more, however, terrible leadership, terrible decisions and the increasing poverty of truly creative drug development is putting me off and making me realize one of the growing problems in our health care systems is the FDA. Fewer drug approvals, more approvable letters (known as kiss of death letters), no leadership, too many statistically driven questions, too little concern for patients. And an approval process with an outright pernicious impact on creativity.

Everything is about the increment - there are too few companies pursuing cures for diabetes, cures for Alzheimer's Disease, cures for cancer. It is too hard - better to go after a target that is more manageable. If a colorectal cancer treatment extends life five and a half months, let's see if we can develop one that extends life eight months. If this new diabetes drug reduces blood glucose a certain level, well let's come up with a treatment that reduces it the same amount with less doing and side effects. If the FDA has approved several drugs that barely work in putting off Alzheimer's symptoms for six months to a year, maybe we can do 10% better.

This "investing to the increment" involves hundreds of billions of dollars to make marginally better solutions to problems. Meanwhile, we are light years away from curing diabetes, curing Alzheimer's, curing any one of a number of forms of cancer. The whole rage is treatment - the practical approach - the business like approach - because the rewards are easier to obtain and greater with incremental investment. This is not just Big Pharma, it is mot life sciences companies. Even worse, bold, new biotechs with hot technology are increasingly being bought out by dinosaur Big Pharma companies who then superimpose this investing in the increment approach to their product development.

There are some solutions:

1) Extended patent protection for more powerful or more successful treatments that cure diseases
2) A faster regulatory path for drugs for the terminally ill or for previously untreatable diseases
3) Bonuses - and I mean big ones - for treatments that radically reduce the cost of a disease to Medicare and Medicaid.

I don't see the current administration doing anything with the FDA except asking them to approve some form of abstinence pill - how about Ambien? - and the current head of the FDA has no vision or political clout inside or outside the agency. Maybe after Mark McClellan earns enough money as a consultant and speaker to pay for his kids; education he can come back and run the FDA and I can start writing about stocks again.

On that note - if you want to see a bold, creative company, incredibly risky, check out Transition Therapeutics, TTH.TO, my freebie for the month, maybe the quarter, for all you cheapskates who only consume free information

Yes, it is time to buy - sort of. It is actually time to do some research, time to prepare, time to nibble. I write this at 10:50 AM on Thursday August 16.

As you know, I recommend biotech and life science stocks for a living, via a newsletter, the ChangeWave Biotech Investor, and this is not a plus for letter but many of my recommendations have outperformed the market in the past week and about a third are up. Why?

• Fear of a recession and a flight from some core consumer and related stocks has pushed money to other areas of growth - and biotech and life sciences is the fastest growing set of companies in the world.
• If you speculate, are you going to time the market and get into subprime mortgage lenders or bonds, or the home builder, or would you rather invest in a speculative company trying to cure cancer or treat Alzheimer's Disease? That is a no-brainer for many who have a longer term perspective - not to mention the home building market is not going to rebound until mid 2009 at the very earliest.
• If you an ignore market tumult - a la Warren Buffet - and look at this kind of correction as a buying opportunity - a la Warren Buffet - and are willing to speculate on some science and regulatory outcomes - a la Michael Shulman, I like putting myself in good company - the bottom or near bottom of a correction is a great time to invest.

As you may have noted, I did say correction, not bear market. Bear markets require some serious economic dislocation - not there - really awful credit conditions for an extended period of time- not there, not going to happen - or really malignant government action - uh, no comment about the folks who brought us "shock and awe", WMD in Iraq and "great job, Brownie," but fortunately the Fed is not run by the current gang who couldn't shoot straight in the White House and on Capitol Hill.

Yes, time to nibble. This correction might go deeper - we don't know how many more hedge funds need to sell equities to pay off margin loans on CDOS, CLOs, and other credit facilities and bonds that are falling in price, and they are selling off their winners (just look at AAPL, not a biotech but so cheap now it is immoral).

Where to start? The little guys, especially those with cash to burn for a few years and a good chart.

I watch the news every night with my wife and we love the ads more than the news. A singing group of old guys crowing about taking Viagra and then bringing home the bacon, so to speak?
Or the ads for Alzheimer's drugs that prey on fear and don't bother to tell you the drugs really don't work that long or at all?

But our favorites are for the ads for the new diseases seemingly created to get an FDA approval and to sell a drug. The winner by far is "restless leg syndrome" which sounds even more ominous when it is called by its powerful and mysterious acronym, RLS. Sure some people may actually have RLS - whatever the hell it is -- but I am willing to bet a whole lot more people bug their doctors or end up taking the pills for a while than actually have RLS. And what is next -- Restless Toe Syndrome?

OK, OK, what is the harm you ask? If a patient is responsible and a physician is responsible, who will use it? Don't kid yourself - these kinds of things scare the hell out of many people, especially older people, not to mention hypochondriacs. It ties up physician hours, wastes hundreds of millions in office visits and drugs you may be paying for with Medicare taxes, and is something that is emblematic of the problems with Big Pharma.

Big Pharma companies lobby and testify saying they need fat profit margins to advance medical care. Many people buy the argument. I would too if they had a different pipeline. Pfizer just cut a big deal and bought into a company for a new pain medication. Who cares - what does that investment give us but more ads? Big Pharma invests hundreds of millions, nah, billions, to cure what we don't need cured, such as that great crippler across the generations, Restless Leg Syndrome. I mean, some of the things you see on TV or I know is in the works are not exactly up there with the black plague, Alzheimer's Disease or cancer in the pantheon of human misery throughout the centuries.

This is a major reason Big Pharma is under assault - their product emphasis and the way they market some ridiculous products strains all credibility. They seem to create new diseases for prime time ads, or me-too drugs, or incrementally improved drugs to extend patent protection. Are these good reasons for Americans to pay the highest drug prices in the world? Hey, I am not Michael Moore, I am not even a tree hugger (I do hug endangered species, for scientific reasons), my concern is that this ridiculous investment behavior will drive the Feds into more rather than less regulation, more rather than less interference in the health care economy.

C'mon, think of it in simpler terms -- I mean, next time to you see a Viagra ad, ask yourself if battery companies would develop a longer lasting battery just for vibrators and how would the energizer bunny fit into an ad? Or next time you see a Restless Leg Syndrome ad, ask yourself if Apple would use its investment dollars to re-digitize soon to be out of copyright songs, and get new copyrights, and market them for the "musically impaired?"

Bottom line: ranting can be fun, but this is also serious. It is also why you need to shun Big Pharma stocks except for the Jurassic Park part of your portfolio and focus on growers, fast growers, cheap fast growers - real biotech and life sciences companies, not the Amgens (AMGN) of the world making believe they are a biotech outfit when they behave just like Big Pharma, with no real pipeline, layoffs and stock buybacks.

Stay tuned - I head for the beach, where I get to do some real thinking on longer-term tech and science and regulatory trends, and that is what I will be doing the next couple of weeks. If there are topics of interest, stop being a wuss, post something will ya?

After a few days at the beach, and some fun (for me) reading, it is clear there are few, if any, "hot" technologies in biotech that are dominating research efforts the way monoclonal antibodies did a generation. Nor is there a giant wave of money flowing into one approach as could be seen with anti-sense technology a decade ago. Monoclonal antibody research eventually produced some important drugs; anti-sense, is, well, nonsensical.

What have I looked at for your reading and investing pleasure?

- genomics
- RNA interference
- alternative research models for Alzheimer's disease
- computer modeling of treatment protocols
- and some other stuff I am still sifting through.

You are probably familiar with much of the hope and hype of genomics and RNA interference. Every year ChangeWave surveys of physicians and researchers in the health care space tell me genomics is the place with the most intensive research efforts and the most hope for major breakthroughs. Tomorrow (maybe Saturday, depending on the weather and whether my kids want to wake up to play golf) I will explore genomics, but my current belief is that is more hype than concrete hope, we are quite far away from therapies, and the place you need to be putting investment dollars in diagnostics and equipment and services for actual research. If I sound too cautious, remember, when scientists say they have mapped the Human Genome, they forget to mention they are not looking at junk DNA -- and junk DNA is about 97%-98% of the DNA floating around.

RNAi has been hot -- in the stock market -- due to deals and acquisitions, but only one drug is in late stage trial. Logically, this is a very promising area and I have taken a lot of grief about warning investors to stay away it was too early. I forgot that desperate Big Pharma outfits make desperate mistakes and they have bid up the value of little guys in this arena. In the next couple of days I will spend more time on RNAi -- again, weather permitting -- and try to sort the wheat from the chaff, the fundamentals from the press releases, in this segment.

Stay tuned -- I am poaching one of my kids' laptops, my wireless card is too weak to pick up a signal from somewhere between my house and the beach, or the canal, or the wetlands, or the Inner Coastal Waterway -- it is a great spot -- and if you have something to add on these and other topics, please post.

OK, OK, I am dawdling -- I am also on vacation at the beach, a real beach, uncluttered by too many humans, at the end of the island, four miles of beach to my right (west) without any sign of human habitation, lots of turtle nests, and this is the domestic US of A.

Genomics: First, in this part, a macro view -- a more detailed look at issues, opportunities and companies will be in the second part of this beach blog.

Genomics is a wonderfully broad area for pundits and an overly broad area for investors. To simpify matters, I want to break it down into pieces:

Genetic Testing

Tests that you and I take to see if we are genetically programmed or predisposed towards a specific disease.

For example, being half-Jewish (and my wife 100% Jewish), we were both tested for Tay Sachs disease before we were married, as it is much more likely to occur in a Jewish couple than a non-Jewish couple. My wife and I were also tested for a gene-predicting cystic fibrosis as there was an occurrence of this terrible disease in my family.

There are more tests now for more diseases than 20 years ago, and testing is moving into areas that are controversial, such as genetic screening of workers who may be more prone to respiratory diseases and therefore disqualified from working at certain jobs. I am, in my heart, a true, bleeding-heart liberal, but people who object to this kind of testing are nuts. There are few investment opportunities in this arena at present.

Genetic-Based Tests

A different subject altogether -- these are tests that look at the genetic composition of a virus or bacteria to determine if you really have a disease. An example of this is the killer staph called MRSA (the hospital staph infection). A company called Cepheid (CPHD) has a quick test for this super bug based on a genetic analysis of a nasal swab taken from a patient. This is the most promising area for genetic testing and investors -- as the quicker we know about a specific disease, the better. Plus hospitals and insurance companies like these tests.

Genetic Screening/Genetic Matching to Treatments

This is a relatively new field and the best example is the test for the HER2 gene in women with (or without) breast cancer. If a woman has this gene and has breast cancer, the drug Herceptin, made by Genentech (DNA), will be much more effective in preventing a recurrence. This is a booming area of research, although the logical step of treatment companies developing these tests has yet to happen.

Gene Therapy This is an area that was very hot and has cooled off since a mid-stage gene therapy killed someone (a relatively healthy someone) in clinical trials. In this category, a treatment replaces or repairs a defective gene to help the patient. This is still a very hot area, lots of little startups with a high level of risk -- and more on this to come in the future.

Genomic Databases This was once "the rage" -- the race to "map" the human genome. The problem is the erstwhile cartographers forgot to tell the world they were skipping the hard part -- the 98% of the genome they call "junk DNA."

This is still a very interesting area as several equipment manufacturers have databases up for rent as companies screen various components of the genome and the proteins associated with human gene interaction with the rest of the body. A good area to invest with maybe no real pure plays in this area -- but you need to look at companies whose primary business is something else.

Genomic Research Infrastructure and Equipment

So far, this is the segment generating serious revenues and making money -- well, some of the companies are doing so.

Firms to look at include Illumina (ILMN), Affymetrix (AFFX) and Sequenom (SQNM). Much more on this after a minor league baseball game, maybe some golf -- but no later than a day or two from now.

See ya.