> This is wrong on a number of levels. I've worked for a couple biotech companies and typically the commercial viability of a drug isn't examined until about phase 1. And even then it's a very rough estimate. I highly doubt any company is calculating an ROI at the screening stage.

Either you're using a wildly different definition of "biotech companies" than the vast majority of people in the life sciences industry or we're talking about entirely different things. Comparing biotech ventures to established pharmaceutical giants and their research pipelines is like comparing a seed stage social network startup to Google: it's a nonsensical and uninformative exercise. The entire biotech industry exists because the pharmaceutical conglomerates are willing to pay hundreds of millions to billions of dollars for a single promising patent acquisition as long as VCs, LPs, and Joe Shmoe's pension shoulder the 99% failure rate. When you're a biotech, you're not afraid of cannibalizing existing revenue or wasting precious resources better allocated elsewhere and pharmaceutical companies are perfectly willing to let everyone else light their money on fire. The successful biotech investors that have decades of positive returns most certainly look at market potential when deciding where to invest but even they have to make wild shots in the dark because they lack the massive amount of data that pharmaceutical companies work with.

Oh and "typically the commercial viability of a drug isn't examined until about phase 1" is downright false unless "until about" means years in advance. Any biotech company that hasn't figured out whether to treat their potential targets as normal or orphaned drugs by the time they get to animal testing has no business developing medicine and spending other people's money in the process. That most basic step necessitates analyzing the market potential of drugs.

> Second, it's typically the science that limits the effectiveness of therapy, not the potential ROI. The reason why many drugs only treat symptoms is because that's the best science can do right now.

That's obvious, given that ROI doesn't effect biochemistry. There is a whole universe of molecules but which ones we actually find out about and bring to market is dependent on a complex equation balancing luck, science, and a bunch of actuaries. Biotech companies can ignore that last one because it's not their cash that is going up in flames.

> Third, curing a disease can often have a much better ROI than just treating symptoms forever. Look at Gilead's hepatitis C cure. Before it came to market the drug revenue for that disease was maybe $2 billion. The first year that Gilead's drugs were on the market, they sold $12 billion. The cure was way more profitable.

I don't think you could have chosen a worse example to make your case. Sofosbuvir was a once in a lifetime discovery made by a biotech startup, Pharmasset, that resulted in the largest pre-approval acquisition and one of the fastest FDA approvals for a major drug in the history of medicine. That company was started in the late 90s with the express purpose of curing hepatitis C and the second it was clear that Sofosbuvir was on the road to breakthrough therapy designation by the FDA, every single pharma company was scrambling to acquire it. The only way to get such a designation is if the existing treatments had a high toxicity, caused many unbearable side effects, and weren't that effective in treating chronic infections with a rapidly oncoming patent cliff. For all intents and purposes, there was no consistently effective treatment for hepatitis C, let alone a cure, before Sofosbuvir.

Oh, and what happened next? Gilead lost almost half of its market cap from its 2015 peak after missing quarter after quarter of earnings estimates and downgrading revenue projections for its entire antiviral portfolio. If competition continues chipping away at their hep C products, their 2011-2015 gains (80+% of their peak market cap) will be wiped out. That's what a cure gets you: a shrinking market and brutal competition that wants to cash in before the well runs dry.