Always remember these tips when you want to trade picks which are waiting some sort of FDA decisions
- If a stocks get FDA approval, it jumps 30-40% easily.
- If the market cap is below 1B and FDA denies or give complete response letter then the stocks falls down by 30-40%. For market cap above 5 -10B, there is movement of up or down by 2%.
- Buying activity in stock starts 3-4 month ahead of FDA decision. Selling activity starts after 3 days of approval.
- If FDA panel decision doesn't back up drug, it will fall. After FDA panel decision, official approval from FDA comes within 1 month.
- If FDA panel back any stock, it will keep rising till it gets final decision. On final decision date, if stock get approval, stock rises in the morning and then it falls.
- On receiving complete response, stocks falls and keep falling for atleast 15 -20 days. Buying activity starts after 15 days on anticipation that company will resubmit for FDA approval.