BCDA – Phase 3 Data

Phase 3 data is not as significant as phase 2 if the data is positive, but it can be deadly if the data is bad.  Most traders do not trade the event for this unless they have some in depth knowledge of the study, previous data releases, what the data specifically means, and a number of other important information.

A lot of traders who play this as a short term trade might look at the weeks leading up to the event to capture the runup if the wider market gets excited and starts a little buying frenzy.  The weeks leading up to an event are usually very volatile and finding 10-30% swings in price over the course of a week or two is not unusual.  However, traders should understand the risks associated.  Short term traders can get caught up in a situation where the company is in desperate need of cash and may need to do a pubic offering, ATM or otherwise.  They could decide to do it before the PDUFA–which has larger implications that we can get into in the education section of the website–but that is just one example of something that could be detrimental to a short term traders.  And there are other things that could do it too, like the company sending out a PR saying they are not going to submit the study after all, or need to delay their submission to address a need that the FDA has brought up.  Or, a common one you might run into, is that the FDA could come out and ask the company to do an Advisory Committee meeting before their PDUFA, if the FDA has a concern about a batch check that previously happened, or a past failed attempt.  The AdCom can definitely scare traders, so it would hurt if someone was already in, or possibly create an opportunity if someone was not in yet….