clinical trial discontinuation short
What it checks
When a drug company terminates or withdraws a late-stage trial, we short the stock for the next 2-6 months because the lost pipeline value usually takes that long to fully price in.
Mechanism
A Phase III trial transition to TERMINATED/WITHDRAWN/SUSPENDED removes a major late-stage pipeline asset and the sponsor stock re-prices the lost NPV over 60-180 days.
Signal rule
Trial status IN (TERMINATED,WITHDRAWN,SUSPENDED) for sponsor_ticker โ SHORT T+1, hold 60/120/180d.
Data dependencies
daily_pricesAdjusted-close OHLCV for every US-listed ticker; primary price feed.
clinical_trials_phaseiiiWorker data table, see services/worker schema.
Expected edge
- Paper alpha
- ~-25% drift (PDUFA-CRL analog)
- Paper window
- 1999-2009 (Rothenstein-Tomlinson)
PDUFA-CRL analog: -25% on regulator catalyst loss (Rothenstein 2011 JCO).
Example tickers where this is likely to fire
Illustrative only, the signal fires based on the live data, not a fixed list.
Related families
pdufa extension shortEvent-DrivenFDA PDUFA action-letter delay (Complete Response Letter or 3-month extension) signals additional analyses/trials are required; sponsor stock reprices -3 to -5% event-day with -2% drift over 30d.
orphan drug premium longEvent-DrivenOrphan Drug Act exclusivity + tax credits + waived fees produce 12-month sponsor outperformance for small-pharma orphan indications.
phase 1 to 2 advancement premiumEvent-DrivenPhase-1->2 advancement carries lower baseline expectations than Phase 3 readout, generating a stronger relative-information sponsor reaction (~+6-10% over 60d).
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