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Stock Watch: Do Regeneron And BridgeBio Stock Movements Signal Smarter Investors?

Volatility Has Been Lower Than Usual Following Recent Announcements

 
• By Andy Smith

Historically, announcements from biotech companies have triggered stock price fluctuations as investors misinterpret the details. However, two recent instances suggest this pattern might be shifting.

Stock Watch Image, Andy Smith
ANDY SMITH OFFERS A LIFE SCIENCE INVESTOR'S PERSPECTIVE ON BIOPHARMA BUSINESS

The public market for biotech stocks is notoriously volatile. Retail and generalist investors may become confused or react irrationally when a small biotech company releases “positive” or “encouraging” data from tests conducted on a handful of rodents using an unvalidated disease model for its experimental drug. This issue has worsened with the advent of trading algorithms that might be programmed to disregard preclinical announcements but could still buy the stock of a company announcing a “positive” clinical trial, with the only positive element being that the active arm shows the same safety (with efficacy mentioned much further down in the announcement) as placebo.

When Dyax Corp announced that voting in the February 2009 FDA advisory committee meeting to decide on an approval...

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