Biotech Trading
Terminology

The application a company files to start human testing. Think of it as “permission to experiment.” Not tradeable — too early. The stock rarely moves on an IND filing because it’s just the starting line, not a result.

First-in-human testing, usually 20–80 healthy volunteers. Tests safety, not efficacy. Low failure rate (~30%) because the bar is just “don’t kill anyone.” Rarely moves the stock unless the drug shows unexpected efficacy signals early.

Tests efficacy in 100–300 patients with the disease. This is where most drugs fail (~60% failure rate). A positive Phase 2 is the first real signal that a drug works. For micro-caps, a strong Phase 2 readout can double the stock overnight.

The big one. 1,000–5,000 patients, randomized, placebo-controlled. Costs $50M–$300M. Success here means you’re going to the FDA. Failure here craters the stock 50–80%. This is the binary event that separates real drugs from expensive science experiments.

The formal submission to the FDA requesting approval. Filing accepted = the FDA clock starts. Takes 2–6 months to prepare. The filing itself is a mild positive — the real fireworks come at the PDUFA date.

Same as NDA but for biological products (antibodies, gene therapies, cell therapies). Different regulatory pathway, same significance. If the drug is a biologic, the company files a BLA instead of an NDA.

The FDA’s deadline to make a decision. This is THE binary event. The stock moves 20–80% in either direction within 24 hours. The single most important date on any biotech trader’s calendar. Miss this date at your own peril.

A panel of independent experts that votes on whether a drug should be approved. Non-binding but massively influential. A yes vote is bullish. A split vote creates chaos. You can watch these live — the votes happen in real time, and the stock moves with each one.

FDA rejection. Not necessarily permanent — the company can fix issues and resubmit — but the stock typically drops 40–70% on a CRL. Often cited reasons: manufacturing issues, insufficient data, or safety concerns. A CRL is the biotech trader’s worst-case scenario.

FDA reviews in 6 months instead of 10. Signals the drug addresses a serious condition with unmet need. A mild positive for the stock — it means the FDA thinks this drug matters enough to fast-track the decision.

The gold standard. FDA provides intensive guidance, rolling review, and organizational commitment. Historically ~90% of BTD drugs get approved. Getting BTD is one of the strongest bullish signals in biotech — it means the FDA is actively helping the drug succeed.

FDA facilitates development of drugs that treat serious conditions. Less impactful than BTD but still a positive signal. Enables rolling review (submitting sections of the NDA as they’re completed rather than all at once).

For diseases affecting fewer than 200,000 patients. Comes with 7 years of market exclusivity, tax credits, and reduced fees. Makes small-market drugs economically viable. The designation itself is a catalyst because it signals a protected revenue stream.

FDA approves based on a surrogate endpoint (e.g., tumor shrinkage) instead of waiting for survival data. The drug can sell immediately but must run a confirmatory trial. Risk: confirmatory trial fails = approval withdrawn. It’s approval with an asterisk.

The main question the trial is designed to answer. Hit it = success. Miss it = usually failure. Everything else is secondary. When a press release buries the primary endpoint and leads with secondary results, that’s a red flag.

Statistical significance. p<0.05 means the result is unlikely due to chance. p<0.001 is a strong result. p>0.05 = the trial “missed.” Watch for companies that report p=0.049 and celebrate — that’s barely clearing the bar.

Used in survival studies. HR<1.0 favors the drug. An HR of 0.7 means 30% reduction in risk of death. The lower the better. HR of 0.5 = halved the risk. HR above 1.0 means the drug performed worse than placebo — game over.

Did patients live longer? The gold standard endpoint. Hard to game, takes years to mature. If a drug shows an OS benefit, the FDA almost always approves it. Nothing in clinical data is more powerful than “patients lived longer.”

How long before the disease got worse? Faster to measure than OS, often used as a surrogate. PFS wins are meaningful but not as bulletproof as OS. The FDA accepts PFS for accelerated approval in oncology.

What percentage of patients responded to treatment? Used in oncology. Not as strong as OS or PFS but faster to measure. An ORR of 40%+ in a tough cancer is impressive. Below 20% is usually not enough.

Half the patients get the drug, half get a sugar pill. The gold standard for proving a drug works. Without a placebo arm, it’s nearly impossible to know if improvement is from the drug or just the placebo effect.

Patients are randomly assigned to drug or placebo. Prevents bias. A “randomized, placebo-controlled” trial is the gold standard. If a company runs an open-label, single-arm study, the results are weaker evidence.

Neither the patient nor the doctor knows who’s getting the drug. Prevents conscious and unconscious bias. “Randomized, double-blind, placebo-controlled” is the trifecta — the strongest trial design.

Total value of the company (share price × shares outstanding). For biotech: micro cap (<$300M) = single-asset, high volatility. Large cap (>$10B) = diversified pipeline, lower single-catalyst risk. Market cap tells you how much the market already believes in the pipeline.

How many months or quarters the company can survive at current burn rate. Below 12 months = dilution risk. Below 6 months = existential. Always check this before buying into a catalyst — a company that needs cash will raise it, and your shares will get diluted.

Company sells new shares to raise cash. Your existing shares become worth less. Pre-revenue biotechs dilute constantly. Always check the cash position before a catalyst. If the company has 6 months of runway, expect an offering — often at the worst possible time.

Analyst estimate of maximum annual revenue for a drug at commercial maturity. $1B+ = blockbuster. $500M+ = significant. This number drives the stock’s upside math. If peak sales are $2B and the market cap is $500M, the upside is clear. If peak sales are $200M and market cap is $1B, something’s off.

An event with two outcomes: success or failure. PDUFA dates and Phase 3 readouts are binary. The stock goes up big or down big — rarely sideways. These events are what Bio-Score is built to measure.

The options market’s prediction of how much the stock will move. High IV before a catalyst means options are expensive. IV crush after the event = options lose value even if you’re right on direction. High IV is the market saying “something big is about to happen.”

After a binary event, implied volatility collapses because the uncertainty is gone. This is why buying options before a PDUFA is risky — even a correct directional bet can lose money if the move isn’t large enough to overcome the IV crush. Many rookie traders learn this the hard way.

Our proprietary algorithm that predicts volatility magnitude, not direction. Scale 0–150+. Scores above 150 = “powder keg.” Three factors: Materiality (30%), Event Tier (40%), Urgency (30%), amplified by market reality multipliers. A high Bio-Score means the stock will move big — it doesn’t tell you which way.

Our algorithmic framework for evaluating approval probability. Four pillars: Efficacy Signal (40%), Safety Profile (25%), Regulatory Designation (20%), Company Track Record (15%). Three modifiers: Indication Expansion, MOA Validation, Prior CRL Penalty. Unlike Bio-Score, this one does predict direction.

A catalyst with Bio-Score above 150. Predicts a massive move regardless of direction. When you see the powder keg label, pay attention — the stock is about to move 40%+ one way or the other. These are the events worth building a thesis around.

Your personal watchlist of catalysts you’re tracking. Add catalysts to your deck to monitor their Bio-Scores as event dates approach. Think of it as your catalyst war room — everything you’re watching, scored and sorted.