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The Run-Up Method
For those not familiar with the Run-Up method, here is the concept:
Biotech companies spend between $325M and $750M from development to approval of a new drug, a process that takes about 8-10 years. This begins with the creation of the drug, then is followed by phase I, II, and III clinical trials- all under the watchful eye of the FDA. Only at this point are some drugs assigned a date, at which approval or denial is to be announced. This decision date is known at least 6 months in advance. The Run-Up method involves locating and buying shares of these companies well before their decision date, riding the share price up, and selling BEFORE the FDA announces their decision. The concept can also be applied to clinical trials with data releases. The goal is simple: Minimize risk while maximizing consistent profits.
This system has a proven track record of success. In 2009 my biotech portfolio gained 273%, in 2010 216%, and 155% 2011 YTD. The concept seems simple- buy early, hold, and sell before the catalyst. However, it can be quite complicated. What is the key to successfully trading biotech catalyst events?
Research, Research, and more Research By the time you hear about one of these stocks in the news it is too late. The best profits are made by getting in before the masses. This is what BioRunUp.com subscription service provides for you. We are constantly researching and using every resource available to find the next catalyst event. Some of our sources include:
- Paid Subscription Services - SEC Filings - News Feed Searches - Phase III Trial Results - Forums & Bulletin Boards - Company Websites Not every FDA or Clinical catalyst will result in a run-up. When taking into account what stocks to discuss we take into account many factors, including (but not limited to) the following: - Company Market Cap - Drug Type (Potential Market) - Cash on Hand (Dilution) - Perception of Approval Odds - New NDA or Re-Submission - Is an FDA Panel Scheduled - Partnerships - Management Reputation
As you can see, this is not a simple process. Many hours of careful research and analysis is required for each and every stock. The majority of the stocks we research do not meet our strict criteria and are not published.