There's hedge funds that systematically short biotech companies, since they estimate most of them will fail. Reasoning with them about the merits of the company doesn't work, they just admit it's a matter of statistics.
Assuming that "most of them would fail" has little to do with this investment strategy being good or bad. Venture capitalists also assume that most of the companies they fund would fail.
What the hedge funds you are talking about assume is that investors in biotech companies value them more than they are worth. It may sound similar to what you said, but really is a very different assumption.
