Surrozen jumped 18.4% to US$25.62 after its latest earnings, a sharp move for a biotech that still sits on deep losses. Traders are reacting to the headline surge, while the longer view remains far more complicated. The company continues to post sizeable losses on a small revenue base, and the stock already trades on a rich price to sales multiple versus other biotechs.

For long term investors, the real story is not today’s pop. It is how Surrozen plans to fund itself, confront negative equity and justify a premium valuation while earnings stay in the red.

Like the volatility in Surrozen but worried about rich valuations on loss making biotechs? Check out the 78 resilient stocks with low risk scores for stocks that combine more…