Post by biotec on Mar 26, 2014 7:43:05 GMT -5
The FDA is not required to hold an advisory committee meeting for any NDAs they receive, but may choose to do so to get the opinion of independent leading experts in the drugs specific fields. The FDA is not bound by their decision, which comes in the form of a vote, but usually follows their advice. It is important to note that they may vote for approval, but give warnings in the meeting, so the vote is not always a good definitive source of information about the meeting. The good news about these meetings is that they are scheduled long in advance and posted on the FDA website. Even better you can watch the meeting live online and read the background materials released two days before the meeting. The background materials will include a series of voting questions and people will try to analyze how favorable the wording of these questions are to get a feel for how the meeting will go. Finally, the adcom is usually a binary event. Poor vote and the stock tumbles, strong vote and you could be looking at a double.
-How the market reacts: Up BIG on announcement of a positive vote maybe 20-150% depending on the size of the company. Again, if the drug treats what may be a large market then you may see an insane spike. Down on negative data by 15-40%. A binary event that you c
-Worth Playing? YES, though not for the faint of heart. You can usually play an adcom by watching the stock price as it leads up to the meeting. Usually it will stay up a bit in anticipation of the adcom. Two days before the meeting there will be a slight jump up or down based on if people believe the released information has a positive or negative bias. From there there is generally a decline as those who do not want to risk a binary event exit the stock. This is a good time to buy in. I generally like to buy in on the day before, and sometimes at the last minute the day before. The stock will almost certainly halted the day of the meeting so make sure you’re in the day before. Now you can watch the adcom live on the FDA webcast if you would like. I recommend at least tuning in for the most important part: the voting questions at the end. This usually occurs from around 4 pm to 5 pm. There will be a series of questions and each panelist will vote and give an explanation before a final vote on “would you recommend FDA approval for this drug?” occurs. The stock halt is usually lifted in the after hours (AH) and you will most likely see the markets interpretation of the results immediately. Some things I’ve noticed: if a strong positive reaction occurs AH, don’t sell, wait for the next day when more attention goes to the drug and the stock will rise higher (ex. VVUS); if a weak positive reaction occurs, this could be bad as it may just be that no one is sure how to interpret the panel advice yet or there is just not much excitement (ex. BMRN). These results have a lot to do with how much the company has riding on a decision. There is a 1-2 window for the price to stay high or increase. After that the old hype factor kicks in and these stocks will drop, a lot. Granted it will drop to a higher-than-pre-adcom value, but it won’t be your max profits. Many analysts will set new price targets based on the drugs potential market, but don’t get caught up in the hype like everyone else: the drug isn’t even approved yet
-How the market reacts: Up BIG on announcement of a positive vote maybe 20-150% depending on the size of the company. Again, if the drug treats what may be a large market then you may see an insane spike. Down on negative data by 15-40%. A binary event that you c
-Worth Playing? YES, though not for the faint of heart. You can usually play an adcom by watching the stock price as it leads up to the meeting. Usually it will stay up a bit in anticipation of the adcom. Two days before the meeting there will be a slight jump up or down based on if people believe the released information has a positive or negative bias. From there there is generally a decline as those who do not want to risk a binary event exit the stock. This is a good time to buy in. I generally like to buy in on the day before, and sometimes at the last minute the day before. The stock will almost certainly halted the day of the meeting so make sure you’re in the day before. Now you can watch the adcom live on the FDA webcast if you would like. I recommend at least tuning in for the most important part: the voting questions at the end. This usually occurs from around 4 pm to 5 pm. There will be a series of questions and each panelist will vote and give an explanation before a final vote on “would you recommend FDA approval for this drug?” occurs. The stock halt is usually lifted in the after hours (AH) and you will most likely see the markets interpretation of the results immediately. Some things I’ve noticed: if a strong positive reaction occurs AH, don’t sell, wait for the next day when more attention goes to the drug and the stock will rise higher (ex. VVUS); if a weak positive reaction occurs, this could be bad as it may just be that no one is sure how to interpret the panel advice yet or there is just not much excitement (ex. BMRN). These results have a lot to do with how much the company has riding on a decision. There is a 1-2 window for the price to stay high or increase. After that the old hype factor kicks in and these stocks will drop, a lot. Granted it will drop to a higher-than-pre-adcom value, but it won’t be your max profits. Many analysts will set new price targets based on the drugs potential market, but don’t get caught up in the hype like everyone else: the drug isn’t even approved yet