Northern, WI  11/26/2012 (BasicsMedia)  —  Trading Biotech stocks is making educated guesses on what the FDA will rule.  It’s so odd really when you think about it from a trading perspective because they (Biotech Trades) are volatile and constantly gap higher or lower and there is no getting in – or out – it reminds me of the days of trading commodities where Soybeans or Corn Futures at the CBOT and prices would be limit up for many days during a drought.   The difference here is liquidity dries up and you can’t get in or out..I guess it’s the same..I guess the 2012 FDA trades are the new Bio tech Commodity trades with similar risk and reward.

When trial results come in for a company in the health care space, it’s often do or die, make or break.  Tranzyme (Nasdaq: TZYM) has been the biggest loser, with shares down a devastating 75% and shares fell from $4 to below $1 after results came in that its drug TZP-102 was no better than a placebo in helping gastroparesis patients.   AcelRX (Nasdaq: ACRX) , on the other hand, was up after excellent results with its drug sufentanil in comparison with intravenous morphine for treating post-operative pain and shares started 2012 under $2 p/s..today they reached $5 and are marching into year end  – while –  Threshold Pharmaceuticals (Nasdaq: THLD) experienced a jump at the start of 2012, after some initial excitement about the results of its drug TH302 applied to maintenance therapy for soft-tissue sarcoma.  Shares have fallen steadily since September from $9 p/s to $4 today.

Portfolio managers in these sectors are wily money managers knowing correctly how to wager on the FDA, and they are often long and short multiple stocks, they also have MD’s on staff and guys who have been covering Biotech and Life Sciences for years..my point is they are good at trading these stocks.  But investors have been taking Long side (Buy) pot shots on FDA bets for many years and will be for many years to come…good thing shares cannot go below zero!!

Disclaimer:  We have no position in any stock mentioned here and we do not intend to trade, nor are we paid to write about them.

 

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