1 Way To Search For The 'Next Big Thing' In Biotech

The graph below was produced by Capital Market Labs.

The health care sector and the biotechnology industry, in particular, have been substantial out-performers in this extended bull market run.

While investors have seen many “nano-biotechs” disappear with failed drugs and FDA panel results, others have boomed from the nano-world to the large-cap world.

Who’s next?

In biotechnology, it starts with an idea and then a product. Together, that means Research & Development.

The chart below displays all of the biotech companies in North America below $1 billion in market cap (x-axis), and their R&D expenses per $1 of operating expense (y-axis).

Of particular interest are the firms spending more than $0.50 out of every $1 in operating expense on R&D.

Synergy Pharmaceuticals Inc SGYP, Radius Health Inc RDUS and Argos Therapeutics Inc ARGS are a few of the biggest spenders (on a percentage basis).

Ophir Gottlieb can be found on Twitter @ophirgottlieb.