2. Bet on the jockey
Don't bet on the horse; bet on the jockey. That old racing adage is at the forefront of the minds of many venture capitalists. Top management who have been successful in the past tend to continue their winning ways.

Research the management teams, especially the CEOs, of any biotech in which you're considering buying shares. One striking example of the "bet on the jockey" philosophy is with MannKind (NASDAQ: MNKD ) . The company's CEO, Alfred Mann, founded 17 companies over his career, amassing a net worth of over $1 billion in the process. Mann has used his personal fortune to keep MannKind going during difficult times.

There aren't many CEOs with that type of track record. However, several biotechs have CEOs who bring solid credentials to the table. While it isn't always critical that a scientist be at the helm of a biotech, having a CEO who understands the company's product in-depth as well as the industry helps.

http://www.fool.com/investing/general/2013/04/22/want-to-invest-in-biotech-think-like-a-venture-cap.aspx