How true is that biotech truism?

They call it “short the launch.” It’s the Wall Street principle that a biotech company will rise to new share-price heights when its product wins FDA approval, and then it will crash once the pedestrian realities of actually selling drugs become clear. And thus, the saying goes, there’s money to be made in betting against a commercial debutante.

But does that cliche hold water? Analysts at Cowen looked at 45 biotech companies that launched products over the past five years, and found pretty resounding support for it. At the median, those companies rose 74 percent over the two years that predated their FDA approvals. But if you bought a share on the date of the FDA blessing, you’d be down 36 percent two years later, again at the median.

However, the exceptions to that rule could prove ruinous for anyone willing to follow it blindly. As Cowen points out, the minority of companies that actually rise after approval do so at quite a clip. That means anyone brave enough to short every new launch could be made to look wise by the majority but left penniless by the outliers.