Image: Erica P. Johnson

Research scientists devote decades to learning how to evaluate complex chemical and biological systems. Once they master that, they may be asked to join a biotech firm. And that can thrust them into a new science--Wall-Street style analysis--to verify the firm's financial promise.

Even for seasoned venture investors biotech is one of the more difficult industries to evaluate. Add to that the uncertainty raised by a rash of corporate accounting scandals in the past year, and assessment becomes all the more daunting.

For most scientists an employer's financial prospects are first linked to job security, and many fail. An analysis of more than 600 biotech firms over six years, 1991 to 1997, by TSS Financial and Ernst & Young found that 11% had failed, 27% had merged and 62% were still in operation. But the potential value of stock options is also an important part of...

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