When you think about trading biotech or pharmaceutical stocks… the first thing that pops into most people’s mind is, Johnson & Johnson, Merck & Co. or Novartis…
Companies like Melinta Therapeutics and Chiasma are foreign to most casual traders.
However, if action is what you’re after — and what I mean by that is the potential to return massive profits in a short period of time—then you’ll have to get comfortable trading the smaller and lesser-known pharmaceutical stocks.
Through trial and error, I developed my FDA Insider Alerts system that lets me know EXACTLY when and what biotech stock to buy.
No, I’m not getting some insider information… I’m doing my due diligence—identifying chart patterns and catalyst events that signal when a stock could run up.
I’ve been on rinse and repeat mode for some time now…
That trade above took less than 2 weeks to develop…
The thing is, in order for you to take advantage of opportunities like this, you need to uncover the catalyst events that biotech traders, like myself, are focused on…
However, you have no chance at success if you aren’t up on the key terms. I’m referring to the language you need to understand to profit off FDA catalyst events.
One of the most important terms in the cycle of every biotech and pharmaceutical companies’ life is PDUFA.
PDUFA is just short for the Prescription Drug User Fee Act.
Basically, this is one term I look for when I’m filtering for biotech trades… and it’s the first step in the 3-step system. If you don’t know how my strategy works, check out my last post here.
Let’s get some background information about the Prescription Drug User Fee Act (PDUFA).
Under PDUFA, the U.S. Food & Drug Administration (FDA) has about 10 months to review a new drug application.
It’s a law that allows the FDA to collect fees from biotech and pharmaceutical companies seeking drug approval — allowing them to partially finance the process of approval.
I know, it sounds as if you need to go back to school to understand this whole process, just to trade biotech stocks.
However, all you really need to do is find out when the PDUFA date is. You see, it’s a specific date when FDA experts meet and approve or reject a treatment.
That simplifies things right?
But that’s not the best part…
… biotech stocks tend to release their PDUFA dates to give traders and investors a heads up.
When it comes to PDUFA dates… you’ll sometimes hear me refer to them as FDA approval dates — and once my clients hear me mention FDA approval, they know it’s time to keep the stock on the radar.
But the thing is… there are so many biotechs out there, how do you know which ones to trade?
I look through an extensive calendar and place them on my watchlist, with the exact price range I’m looking to get into.
For example, my clients get to see the “uncensored” version of this… they know the stock, the exact catalyst, a detailed trade plan, as well as the catalyst date.
They also receive my entry… and of course my exit alerts…
It’s the fourth quarter… and that means there are a lot of potential catalyst runup opportunities.
If you haven’t done so, now’s the time to diversify your profit buckets and leverage the power of FDA Insider Trades to stack up in this volatile market.