Watch Your Portfolio Skyrocket from Phase 3 Drug Trials
If you’ve been in this industry as long as I have, you know that it’s possible to estimate when a drug’s Phase 3 test results will be published. Why is this important?
A Phase 3 clinical trial is the most expensive and critical part of a drug’s clinical testing cycle.
Why is that?
Well, I want you to think about the time, money and brainpower that go into a drug that makes it to Phase 3.
Think about all the stages it had to go through to get there…
First, it had to go through experimental, or preclinical, testing, where it was tested in a controlled environment on animals that serve as biological indicators.
Next is Phase 1.
A positive Phase 3 trial means that a drug is more than likely to get FDA approval.
Phase 1 testing is done on a small number of patients, maybe 50 on average. That’s when the FDA gives permission for a company to do human testing. So healthy people are recruited and tested with a drug that usually comes in the form of an injection, pill or infusion (when you have an IV in your body).
Don’t worry. These healthy people are given only small doses while they’re closely monitored by doctors and staff.
The drug either fails because it’s not safe enough, or it goes to Phase 2. Now, Phase 2 is where it starts to get more serious. There are about 100-200 patients tested on average.
With Phase 2 tests, doctors and researchers can find out what a safe dose is that should be given patients. Doses vary for each kind of patient. And researchers actively track who gets better and who gets worse. If the patients get worse or nothing happens at all, the drug is a failure. If that’s the case, the company has to walk away… and they lose quite a bit of money.
But if it’s successful, it goes to Phase 3, the most important phase of all. Stick with me here, because this is where it gets interesting… and incredibly rewarding if things work out.
You see, Phase 3 trials usually involve at least 300 or 400 patients. For diseases like diabetes that affect a lot of people, it can be 3,000 or 4,000 patients. Often times, these Phase 3 trials can cost half a billion to a billion dollars to complete. Seriously. These companies have to invest this much money before they know they can get approval from the FDA to sell their product.
Which is why the results of the Phase 3 trial are so important.
These results are going to show the company, the FDA, investors and all the doctors out there — and of course, the stock market — whether or not the drug really works.
Note that as an investor in a drug company, you would prefer that a drug fail in Phase 1 or Phase 2 testing. Why? Because those two phases don’t cost that much. But a failure in Phase 3 can be catastrophic. Make no mistake about it: The stakes are extremely high when a Phase 3 clinical test result is unveiled.
You have to understand that by the time a drug enters a Phase 3 trial, it represents 15 or 20 years of drug development. It represents the hopes and aspirations of the company and a lifetime of work by its scientists and researchers.
One last thing on Phase 3 clinical results. Doctors and patients are not allowed to talk about it to anyone. That’s right. You are supposed keep mum until the results are announced. So everything is a big secret.
Now you understand why there’s so much potential for a stock price to swing big in one direction or the other.
And that’s why we want to get into a stock before a Phase 3 clinical result is released.
If the drug works, it’s a great thing. It now means that the company now has something it can put in front of the FDA for approval. The stock is going to soar by 50% or more. I have seen stocks go up by over 500% on the release of clinical results.
Why the huge jump in the stock price?
A positive Phase 3 trial means that a drug is more than likely to get FDA approval. And after it gets approved, it can be sold to patients and marketed to doctors, and businesses can be built on it. And the company gets to earn millions of dollars in sales and profits.
So I told you that a Phase 3 clinical trial is when you get to see if the drug really works in people that actually have the specific disease that you’re trying to treat or cure.
So first, it helps to come up with a list of stocks that have Phase 3 trials outstanding.
And the place to go to come up with this list is a kind of mysterious website where companies list ALL the clinical trials that they are doing. Seriously. Every company that’s doing a clinical trial puts the details of the trial on this website. Like what? When the trial started, for example. And its estimated completion date. With a little bit more research, you can work out when the trials results may be announced.
What’s the name of this website? Now, look, this is a bit of a secret, and I am giving you valuable information when I tell you this.
The website where this treasure trove of valuable information is stored is ClinicalTrials.gov. And here’s how you go about searching for a trial. You get the name of the drug and enter it into the search box… Or you can search for a trial by a disease like lung cancer or diabetes. Here’s one little hint that can make your life easier: Look up the scientific name for the disease before you search, as the companies like to use these terms when put the details of the trials up on the website. You can also search by company name.
Let’s do a quick search for biotech giant Amgen. And if you enter Amgen into the search box, you’ll see a huge list of trials come up. In total, Amgen has 147 clinical trials that it’s actively recruiting for. Now, to be sure, not all of these are Phase 3 trials. For you to figure that out, you have to dig in and do the work. And look up each trial and figure things out. Which is what I do when I come up with a Phase 3 rocket idea for my readers.
If you want to check out how profitable these Phase 3 clinical results releases can be, just look up the biggest stock market winner on any given day. What you’ll see is that on any given day, there is a biotech or drug company whose stock has gone up 50% or 60%. That’s because they’ve issued Phase 3 results. Now go back to ClinicalTrials.gov and put the company’s name into the search box and you’ll find the clinical trial that is making the stock move.
Now all you have to do is to change the order of what you are doing. You need to find the stock first and invest in it before it goes up. It’s hard work, but for 50% or 100% gains in a single day, I would say it’s worth your time.
Just a reminder that all the clinical trials are listed on the website, but you want to pay the closest attention to the Phase 3 clinical trials.
In the future stay tuned as I share more of my strategies in future Tomorrow in Review issues.
Ed. Note: Paul has been a part of a hedge fund team that managed $10 billion. And there’s one sector he specializes in that he says is rife with investment opportunities: biotechnology. In today’s issue of Tomorrow in Review, he gave readers his second top investing strategy for making money on biotech stocks. Sign up for the FREE Tomorrow in Review email edition, right here to start getting these kinds of expert tips before anyone else.