What is the Impact of the FDA in Stock and Options Trading
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When there's a powerful new drug in development better than anything on the market, the FDA labels it a breakthrough therapy. This means the drug is eligible for expedited review for approval to be made available to the public.
It depends on the size of the company and the size of the problem the drug would be treating. Illnesses affected many people equates to big revenue potentials. But the opposite is also true - small problem, smaller sales opportunity.
In relation to company size, smaller companies will see share prices jump higher than larger companies on this news. Using the filters in LevelFields, you can set alerts based on company size and revenue for this event type.
The stock shot up 35% over the past week, following the FDA's decision to fast tract its therapy for Alcohol-Associated Hepatitis - a common ailment among alcohol users.
DRRX stock only has a $40M market cap. This breakthrough therapy designation is only given when the FDA feels the clinical research shows promising results. A company this size that creates a blockbuster drug, can go on to have a market cap in the billions. That would create a 1,000X return, for a market cap of $4B.
We can't know for sure - it could be months or years. And the next set of trials could fail. But these events afford opportunities to multiply returns massively, so keep a watch on this stock.
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