A trading catalyst is an event that introduces violent volatility to a company's stock. PDUFA (Prescription Drug User Fee Act) action dates are among the most critical and influential catalysts in the biotech/pharma industry. These are the dates that hopeful and anxious stakeholders await for the FDA's final verdict on the qualification of a drug's safety and efficacy for commercialization. Share prices of small-cap firms can easily experience double-, sometimes, triple-digit % changes in either direction depending on the FDA's decision. Charts of companies gaining the FDA's nod for their drugs earlier this year are shown below to illustrate stock volatility surrounding the PDUFA action dates.
Since share prices fluctuate much more rapidly during these periods, as indicated by the charts, extra caution must be taken at the choice of entry as well as exit points.
Finally, a list of PDUFA dates in 2H2010 is summarized below to help you target potential investment opportunities. More detail analysis of specific companies will follow as their PDUFA dates approach!
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