If you want to do well with biotech stocks, trade the anticipation of news.
Look at Structure Therapeutics (NASDAQ:GPCR), for example.
On March 8, I learned that GPCR would report Phase 2a 12-week obesity drug data in the second quarter of the year. Knowing that Phase 1 trials had positive results, I anticipated that Phase 2 results could be just as solid — all as we got closer to the data being released on June 3. At the time, GPCR traded at about $36.80.
By June 3, the stock would hit a high of $62.74, with the company posting positive top-line 2a data. To make money, all I had to do was jump into the stock when I first learned that Phase 2b study results would be released in June and wait.
Typically, you’d want to just jump into an anticipation trade early and jump out before the actual catalyst to avoid a potential sell-the-news reaction.
In this case, the potential reward outweighed the risk with biotech stocks.
Better, we can trade biotech anticipation with nearing trial results, PDUFA (Prescription Drug User Fee Act) dates, U.S. FDA advisory panel dates and FDA decision dates. Granted, the strategy isn’t perfect, but it can help get you into potentially explosive opportunities early.
Here are three other biotech stocks you may want to keep an eye on.
Cybin (CYBN)
On Aug. 11, the FDA will decide if it will approve MDMA (midomafetamine)-assisted therapy for the treatment of post-traumatic stress (PTSD).
While a recent study did show that MDMA led to a decrease in the severity of PTSD symptoms after 18 weeks for 86% of participants, a FDA panel voted against approval. That’s because they’re concerned about how trials were carried out.
In fact, due to the “profound alterations in mood, sensation, suggestibility and cognition,” the vast majority of the participants were able to accurately guess which treatment they had received after the study ended, the FDA scientists wrote, as noted by NBC News. “As a result, studies are nearly impossible to blind.”
With a good deal of pros and cons to consider, the FDA could still approve its use by mid-August, which could be great news for psychedelic stocks like Cybin (NYSEAMERICAN:CYBN).
Eli Lilly (LLY)
Oversold shares of Eli Lilly (NYSE:LLY) could easily bounce higher on sales of its obesity drugs. And it could easily jump higher with its Zepbound drug being considered for the treatment of sleep apnea.
In June, the company said “results from its phase 3 SURMOUNT-OSA study, which found that Zepbound at the 10-mg and 15-mg doses aced all primary and secondary endpoints in obese patients with obstructive sleep apnea (OSA), both with or without positive airway pressure (PAP) therapy,” as noted by FiercePharma.
If LLY can get FDA approval for this, it could help the 80 million Americans who currently struggle with obstructive sleep apnea. At the moment, LLY expects an FDA decision before the year is over. The agency already gave LLY a fast-track designation.
Technically, LLY is oversold at its 100-day moving average. It’s also over-extended on RSI, MACD and Williams’ %R, as it trades at $807.79. Initially, I’d like to see a retest of $950.
Syndax Pharma (SNDX)
On Aug. 28, the FDA will decide on Syndax Pharma’s (NASDAQ:SNDX) axatilimab for treating chronic graft-versus-host disease (GVHD) after two previous systemic therapy failures.
Earlier this year, the administration accepted for Priority Review the company’s Biologics License Application (BLA) for axatilimab. As noted in a company press release, “treatment with axatilimab resulted in clinically meaningful results and was generally well-tolerated, with a safety profile that was manageable and consistent with the mechanism of action of CSF-1R [colony stimulating factor-1 receptor] inhibition.”
Helping, analysts at Jefferies (NYSE:JEF) recently initiated a Buy rating on the stock with a price target of $37. The firm argues that the company is on the brink of commercialization with its upcoming U.S. decisions on axatilimab, and revumenib for the treatment of acute myeloid leukemia. Analysts at Stifel also have a Buy rating on the stock with a $42 price target.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.