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...
