Clinical Trial Discontinuation Short
In plain terms
When a drug company publicly terminates or withdraws a late-stage trial, the idea is to short the stock for the next 2-6 months as the lost pipeline value prices in. This signal is currently turned off: our trial data only records each trial's latest status and its planned completion date, not the day the status actually changed, so we cannot honestly time the short without peeking at future information. It will be re-enabled once we capture the real status-change date from ClinicalTrials.gov.
How it works
Analog of the Rothenstein 2011 JCO oncology-drug announcement event study: an adverse late-stage trial catalyst (Phase III terminated/withdrawn/suspended) removes a major pipeline asset and the sponsor stock re-prices the lost NPV with negative drift, mirroring the negative CARs documented around adverse trial-result / regulatory announcements (negative-event underperformance is larger and more persistent than positive-event drift). The catalyst is the ANNOUNCEMENT/transition date, not the trial completion date.
Data dependencies
- Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
- Clinical trials phaseiii
A data feed this strategy reads, refreshed on its normal schedule.
Expected edge
- Reported return
- ~-25% drift (PDUFA-CRL analog)
- Tested over
- 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
When the FDA pushes back a drug's review date by a month or more, we short the sponsor for the next few weeks.
A firm heuristic: long small biotechs (few Phase III programs) the day after a pivotal trial completion. Loosely motivated by the paper's rare-disease market-size idea, but the paper itself reports no stock-return premium; whether this carries alpha is tested empirically.
Buy a drug company's stock the day after one of its late-stage (Phase 3) trial results are posted publicly, and hold for 20, 40, or 60 trading days. This is our own event-study idea about post-announcement drift, not a finding from a research paper.
Explore Clinical Trial Discontinuation Short on alphactor.ai
See which tickers this family is currently firing on, with live signals and rankings.