Doing our best to illustrate biotech with a cran on this health care episode of Industry Focus.

Hi everyone, welcome to Industry Focus Health health care I'm your host Christine

Harajus and I have special guest Max Macaluso on Skype from our Denver

Colorado office welcome to the show Max. Thanks Christine. So Max wears many hats here at the Fool, but he was trained as a scientist.

And so we wanted to do a deeper dive, but also kind of a 10,000 feet look at a lot of the science behind

some of these different drug classes that we hear about. Peter Lynch, famous

investor, says never invest in any idea you can't illustrate with a cran. So at the risk of

getting too weedy we wanted to take some of our concepts that we we talk about

in the drug developing world and see if we can make them a

little bit more draw with a crayon a bull. So first off I want to ask you Max is

your approach due to your science background? Is it different when you're looking at biotech or pharma stocks or do you think it's the same sort of financials nitty gritty as somebody without a scientific background?

Well, it's a good question and the first thing I need to be

cautious of typically is not to be drawn in by the scientific story and in order to

avoid that I've developed a very simple framework that I'm sure people have heard me talk about before I just

refer to as the three peas and that also helps you distinguish between some of the

big farmers and the smaller biotechs and the three peas stand for portfolio patents and pipeline.

So we can look at each one a little bit more detail.

The portfolio Christine, as you know, is just the drugs

that the company currently has on the market.

This, as an investor, will help you identify what the sales drivers are.

It will also let you know whether or not they have any products on the market.

A lot of smaller biots are still pre-commercial stage and the

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