Warning: Every investor should read this before buying speculative biotech companies

When you start investing, it’s easy to get caught up by promising ideas and new technology that goes nowhere, costing you a lot of money in the process.

Companies like Prima BioMed Limited (ASX: PRR), Innate Immunotherapeutics Ltd (ASX: IIL), Pharmaxis Ltd (ASX: PXS), Cynata Therapeutics Ltd (ASX: CYP) and others are all investing heavily in researching their chosen treatments, which they hope will lead to life-changing (and financially rewarding) therapies in the future.

However, this lure of a bright future is like a naked flame for moths – a lot of the time, all it does is burn investors. Here are some key things to consider before purchasing any biotech business:

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