Patience you must have, my young Padawan.

LIMCHIKEEN : I like your view. because of the red, I missed out on Phathom pharma.

XJJX : TNXP can be said to be the worst, and it will continue to fall on Monday.

Arrayfunction OP XJJX : Yep, you are right! It almost certainly will fall! They are in desperate need of cash if they want to keep all their plates spinning in the air. Hence tripling the stock offering.

It would be a horrible stock to swing trade on, as you say. I am only confident in holding because I am very well versed in the science and markets of fibromyalgia and chronic pain treatments. So I can read their phase 3 results and know the FDA has no reason to stall that NDA beyond the end of the year.

If it were a completely novel molecule or something like a cancer treatment I don't understand the market potential of very well, then I definitely wouldn't be staying in

Arrayfunction OP LIMCHIKEEN : Are you talking about Voquenza's approval? I guess it says something about me that I have GERD and never heard of the drug until just now

But you do make a great point that going long on biotechs is a case-by-case basis! A drug getting approved doesn't mean it is guaranteed to gain market share at all.

There are a few rules of thumb I use from looking at the balance sheet - but only to the extent of red flags to rule them out. Since biotechs generate no revenue for years, debt is far more dangerous.

For an average company, (e.g. no plans for an NDA within 6-8 months) I don't hold if they have debt > 15% of assets. Once they start down the debt financing spiral, it's game over man (barring a deus ex machina like a huge grant or angel investor). They can usually limp along for a while by borrowing at increasing interest to make past debt payments. But as the Euro crisis showed, it only works for so long. They can cut costs by abandoning earlier stage work - but often not while a trial is actively ongoing due to contractual obligations.

It's also very important to be comfortable admitting what you don't know! There are sectors in drug development I have a lot of knowledge in from personal research (e.g. depression, anxiety, chronic pain, auto-immune, neurological disorders) but plenty that I don't. If I can't get at least a rough feel for what the market potential and what the demand will be, I wouldn't go long.

That's largely why I avoid cancer drugs. I simply don't know enough about the market to know how easy / hard it will be to capture market share. For the US market, you always need to factor in insurance companies also. They obviously are going to fight tooth and nail not to pay for any new name brand drug. If it's entering the market as being simply better than existing generics,  insurance companies will insist people try the cheaper ones first.

Arrayfunction OP Arrayfunction OP : For example, for me to get coverage for a newer anti-depressant therapy (with ~70% efficacy) my insurance company required that I submit proof I "failed" on at least 4 other medications. In that case, I did have those records already. Otherwise, since the "failure" timeframe is 6-8 weeks minimum on anti-depressants, the treatment would have been on the market almost a year before I could access it.

If something gets approved by Medicare, that's about as close as possible to a guaranteed adoption won't be stalled.

Which is why Voquenza is so curious! GERD can be managed extremely well with generic proton pump inhibitors (e.g. Omeprazole). There is a growing body of evidence to show chronic long-term PPI usage can damage bone health (since it limits calcium absorption). But insurance companies will insist as long as legally possible that such a risk is not enough reason to pay for a brand name drug

Jrithe : I like your view. Good job! bro

Stella-K : good luck for Q4!

Rollingling : you are so coooool!