Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
TB, I am coming back to live on Fool here in hopes that there are some minds which are deep into the biotech sector.

I would love to ask you and other knowledgeable folks in this sector to throw out names of small to mid-cap companies who've already received PDUFA (FDA Approval) so that I can chart some of these names.

I am just learning to navigate the biocatalyst website.

I have one question:

After a Phase 3, if the drug is approved, does the drug still have to go before an FDA Adcom?

Let me refine my question: If a drug goes through Phase 3 with flying colors, would it not take a committee to approve that drug? Or, if the efficacy is so well explained, can just a few people - without meeting in committee to ask questions - approve said drug?

Thanks to anyone taking time to answer.

I'm going to school on biotechs like I went to school on crypto-currencies.

I seek volatility for trades and I have found it in this sector.

What I need to do is identify catalysts which would make me avoid dangerous biotechs.

Two catalysts are:

1. Never trade or hold a stock two weeks away from its next earnings.

2. Never trade or hold a stock two weeks away from its next announcement of Phase 1 or Phase 2 or PDUFA.

But I've made some solid wins, big wins, on biotechs which are trading into a catalyst and which sometimes present at investor seminars.

That said, if you're wanting to learn this hard to understand sector - where rewards are quick, but the risk is also dangerous - welcome aboard the train to self-education.

I will publish one chart next. And I will publish one website.

Then I will leave.


p.s. One addendum I will add which has helped me make maximum money in minimum time on certain trades: short ratio, or, the percentage of shares short.

I like finding stocks which are heavily shorted in all sectors, but especially biotech.

I use finviz.com to look up short interest for every stock I think about trading and to also see how many days it would take for all shorts to cover (called the short ratio).

For instance, on the following stock which is on my "watchlist" for biotechs, VSTM, I went to finviz and see two things about short interest:

https://stockcharts.com/h-sc/ui?s=VSTM&p=D&yr=0&......

1. Short Float: 8.73%
2. Short Ratio: 2.11

All this means is if VSTM were to deliver stellar news in October, and shorts awake to a huge gap up, they will all crowd the exits to buy back shares. This will provide a huge backwind for pushing the price up quickly.

If the drug is not approved, we're looking at shorts adding on.

Hence, this is why I only play a stock into earnings or a catalyst such as news release of a Phase 2 or Phase 3 trial, or PDUFA or Adcom.

I wait to see results.

Yes, a biotech can move up 50% 100% or more in one day. I can trade in and around those days during the day for a daytrade or to establish a safe swing trade.

But on the other hand, one bad bit of news can send your biotech 20% or more in one five minute time frame.

The risk of these things is inherent. I accept that risk. But my purpose here is to learn and teach what I uncover in my studies.

Thus far, my earliest work in biotech is all printed in this first post.


p.p.s. Any short interest above 10% in any stock is a sure sign a stock will react with great volatility on any catalyst day where something out of the ordinary is announced. The bigger the short interest, the more days it would take to cover, the more I question the stock I'm trading. That's why I won't hold into an earnings release or FDA announcement.

Disclosure: at this moment I hold no biotech swing trades, but, I'm looking to enter several as the biotech sector looks overdue for a rally.

I will publish the IBB chart next.
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.