Is there an explanation for the recent spate of biotech Phase II and Phase III clinical trial failures? It's almost impossible to give general reasons for specific clinical failures. Several hypotheses, borrowed from the tenets of behavioral finance, however, may help explain some recent, unanticipated later-stage setbacks. They may also support other studies that suggest that small biotech companies fail more often in clinical development than their larger biotech and pharma brethren.

Biomarkers are being used now across the whole pharmaceutical value chain, but it's unlikely we'll see a surge in the number of VC-backed biomarker discovery start-ups until the business models are proven.

In presenting an investment opportunity to VCs, style can be as important as substance--and indeed a clue to substance.