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A guide to analyzing biotech and pharmaceuticals stocks

Kyle DennisKyle Dennis ·

Analyzing companies can be a daunting task, and if they’re in the biotechnology or pharmaceuticals space, it can be even more intimidating. There are some quick ways to analyze a company before you consider getting into the stock. Most of this information is free and, when you’re first starting out, this is very important because you want to cut down on your costs so you would be able to trade more and “protect” your capital.

With that said, let’s move on to how you can quickly analyze biotechs and pharmaceuticals.

Company website and BioPharm Catalyst

Nearly every publicly-traded company has a website, that provides information on the firm’s background, officers and directors, and the drug treatments in its pipeline. Another helpful tool is BioPharm Catalyst, which gives you an idea of when catalyst events are coming up, allowing you to do your own due diligence on the company at the right times.

Let’s take a look at an example of how you could analyze a biotech company, starting with a look at www.BioPharmCatalyst.com.

Source: BioPharmCatalyst

Moving on, let’s analyze Clovis Oncology Inc. (CLVS), which was due to report data on June 20, 2017, for its Phase III trial of Rucaparib ARIEL3 for the treatment of ovarian cancer patients with a BRCA-like mutation.

Let’s look at the press release on the news:

Source: Clovis Oncology

Company websites offer a plethora of information, including the company’s pipeline, product offerings, press releases, company profile and leadership, to name a few.

Check to see is if the company is a one-trick pony, whether it only has one treatment. Companies with one primary treatment only have one line of revenue stream; if the drug fails, the stock could drop like a stone.

Source: Clovis Oncology

In the company’s pipeline above, it has one drug, but it can be used to treat multiple conditions. Thus, if one of the clinical trials for a specified condition fails, the treatment could potentially be used to treat other ailments.

Still, it is best considered a one-trick pony, as the stock could have plummeted if data on the Phase III clinical trial had been negative.

The bottom line

If you’re looking to trade biotechs, do your own due diligence to see if the company can weather a storm. You’re looking for companies that can stand up to unfavorable data reports in a pivotal clinical trial data. Additionally, look into the company management to see if the team has experience in the field.


  Kyle Dennis runs Kyle Dennis’ Biotech Breakouts (biotechbreakouts.com). He is an event-based trader, who prefers low-priced and small-cap biotech stocks.  

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