Development-stage biotech is what you could call a feast-or-famine market.

Crucial trial data, expert advisory panels, and regulatory approval decisions can all send a stock soaring (or tanking) in the blink of an eye.

For this reason, it's incredibly helpful to keep a calendar of biotechnology catalysts on hand so you can be prepared for when these events happen. Doing so will allow you to either side-step risk or skillfully play the volatile trading that surrounds these events.

In this report, you'll learn about several common catalysts in biotech as well as what they mean for a company. Most importantly, you'll learn when they'll be happening throughout the year.

The Catalyst Glossary below will briefly explain each step of the drug development process. This is followed by our full 2016 Biotech Calendar, covering well over 200 different biotech events.

Let's get started.

Catalyst Glossary

Phase I

The first clinical stage of drug development, phase I, is performed on a small group of volunteers (20 to 100) and looks primarily at safety. The purpose of phase I is to see how the new product is metabolized in the human body and to determine a tolerable dose range. The wider the dose range, the better for the developer.

Phase II

This is the second clinical stage of drug development, often referred to as the safety and efficacy study. The sample size for phase II is larger than phase I, usually between 100 and 300 patients. The purpose is to demonstrate the drug's efficacy (how well it works), to monitor side effects, and to further establish proper dosage.

Patients taking the drug candidate are generally compared to a control group receiving an inactive placebo. The greater the efficacy between drug and placebo, the better.

Phase II trials are sometimes divided into phase II-a pilot trials and phase II-b well-controlled trials.

Phase III

The third stage of clinical drug development, phase III, is often referred to as the confirmation phase, because the primary goal is to see a repeat of the positive effects seen in phase II after looking at a larger group of patients (usually 500 to 2,000 people). Phase III has a strong focus on safety issues, data control, and production preparations.

New Drug Application (NDA)

A new drug application is a request for permission to introduce a new product into interstate commerce. The purpose of an NDA is to provide enough information for the FDA to decide a drug candidate is:

• Safe
• Effective
• Appropriately labeled
• Manufactured effectively

Upon NDA approval, a license is issued, allowing the firm to market the product.

Biologics License Applications (BLA)

A biologics license application, like an NDA, is a request for permission to introduce a biologic product into interstate commerce. BLAs are governed by the Public Health Service Act (PHS Act), which defines biologics as a “virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, or analogous product.”

The FDA requirements for a BLA include:

• Applicant information
• Product/Manufacturing information
• Pre-clinical studies
• Clinical studies
• Labeling

Upon BLA approval, a license is issued, allowing the firm to market the product.

Prescription Drug User Fee Act (PDUFA) Dates

PDUFA dates are target deadlines for the FDA to approve new drugs. Specifically, the FDA must either approve the candidate or issue a Complete Response Letter (CRL) to explain why approval is being denied.

The FDA is normally given 10 to 12 months to review new drugs. If a drug is selected for priority review, the FDA is allotted six to eight months to review the drug. These time frames begin on the date an NDA is submitted.

2016 Biotech Catalyst Calendar

Below is our full calendar of biotech catalysts through the end of 2016. First, a few quick things worth noting:

As a general rule of thumb, we can attribute more weight to catalysts later in the development stage. These are your PDUFA decisions and phase III trial data releases. The closer a product is to commercialization, the more the market is going to react.

Additionally, the smaller the market cap, the greater the impact of a catalyst. A new product approval of Johnson & Johnson will have little impact on the top line because the company is so large already. A small-cap biotech company with no revenue, however, could be an absolute boom or bust.

In other words, look for small companies in late development stages if you want those high-risk, high-reward plays.

There are also several other factors you'll need to consider before investing in any of these companies. Primarily, you want to look at size of the relative disease market, expected share penetration, and the payout structure for commercialization.

There are many ways you can play a catalyst date to your advantage. Here's a quick rundown of a few strategies:

• One method is to either go short or long on a company one to three months in advance of a significant catalyst date. If the general sentiment is negative, go short. If the general sentiment is positive, go long.

  Leading up to a catalyst, investors have little to no new information to go off of, so they tend to feed off emotion more than common sense. As the catalyst date approaches, fear or greed will take over, and the stock will begin to move at an accelerated rate. Play this momentum, and then get out right before the catalyst occurs. This strategy is very useful for avoiding risk.

• Another strategy is to purchase shares just days before an expected catalyst. This is a short-term strategy with high risk but also incredibly high reward. In this strategy, you take a position and actually see the results through. The more you research a drug candidate and its mechanism of action, the greater your chances of being on the right side of the proverbial coin toss.

• The last method we'll discuss is to take a contrarian position almost immediately following a catalyst.

On positive news, you would take a short position after the stock rockets upward. A positive catalyst often creates an irrational buying frenzy that quickly exhausts. People start to take their profits, and a sell-off begins.

On negative news, you would buy, but only if the company has adequate financing. If a company can see itself through another catalyst event without diluting shares, you can often pick up shares at a bargain.