Biotech investments aren't right for everyone, and even for those who are ready to take the plunge, it pays to be prepared. How should one prepare for the crucible of investing in biotech stocks, you may ask? Taking these three steps should dramatically increase your odds. 

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Biotech stocks are incredibly risky. The smaller and more early-stage a company is, the higher the risks. For reference, the chance of a single pipeline project moving from pre-clinical testing through the clinical trials process to survive and get approved by regulators is roughly 13.8%.

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Source Fool.com