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The "White Oak Docket"

Written By Brian Hicks

Posted April 20, 2010

Very few things have such an impact on biotech stocks that the FDA has…

It’s why we commonly refer to the White Oak Docket for information on upcoming FDA decisions… the very reference that contains all pending FDA decisions on the newest cutting-edge and biotech innovations…

And right now, there are 15 companies on this "Docket" awaiting the fate of their latest product submissions…. all of which hold explosive potential.

In just the few weeks that I’ve had access to the "Docket," two very similar profit opportunities have revealed themselves…

Most recently, On March 9th, the FDA drug advisory panel green-lighted an approval to California firm Intermune for its cutting-edge lung-disease drug…

This finding promptly delivered shareholders solid overnight gains of more than 69%.

Not a bad return, right?

Well that depends on how you look at it.

In order to bank those gains, an investor would have had to purchase a chunk of Intermune shares at just the right moment…

And been RIGHT about the direction of the pending FDA approval.

On the other hand, a simple "call" option on this stock paid out gains of up to 524% on the announcement.

Even negative FDA rulings can hand you quick and easy gains.

On February 18th, just 3 weeks before Intermune’s triumph, the FDA handed down a major shock to a lot of investors when it rejected Horizant, a drug for restless leg syndrome pioneered by California biotech Xenoport’s.

Years of development, testing and research, down the drain…

Along with their share price.

In the 24 hours following the decision, Xenoport watched in horror as their stock plummeted from just under $20 a share down to under $6.40…

A catastrophic 68% drop in value.

Just how do you profit from FDA decisions?

Leave yourself plenty of time to trade prior to FDA decision. We’re talking about two to three months in advance, at best.

While these decisions are among the biggest factors, know this.  The FDA’s unpredictable nature won’t always lead to a sure-fire winner.

Yet it really doesn’t matter what the FDA or the White Oak Docket say…

What does matter is being in the know and being in the right place at the right time.

Most of us who use the FDA calendar and Phase III trial dates know one thing: The price of a biotech and pharmaceutical company will go up as the date in questions draws closer.

And if you want to maximize your potential return, have any pending dates in hand at least one to three months in advance. (I should note that in some instances, you can buy a stock days in advance using conference dates.)

In the case of our recent Dendreon (DNDN) trade, which produced 65% and 71% gains, we were able to profit within a day or two of a presentation at the ASCO Genitourinary Cancers Symposium. Buying ahead of this conference – where speculators anticipated an explosive upside move – resulted in quick gains.

You see, as an FDA decision date, Phase III result date, or conference nears and people expect to hear good news, crowds of speculators and traders start coming in to buy the stock, sending the stock up.

This happens over and over again with many biotechs and pharmaceuticals. The only key is having the information in as far in advance as you can… again, this is why having the White Oak Docket is so important.

We also know that FDA approvals, rejections, even Phase III study results can make or break any pharmaceutical company. There have been instances where a company has lost 90% of its value… and there have been instances where a company rises 800% in a single day.

While we have many examples of FDA-related stock bumps, here’s one of our favorite story stocks, Dendreon (DNDN)… and how the White Oak Docket lead us to explosive gains.

On April 6, 2009, here’s what we knew:

Sometime in the month of April 2009, we speculated that Dendreon (DNDN) could explode. We knew the Seattle biotech hoped to reveal positive clinical trial results that its experimental drug can help men with terminal forms of prostate cancer, with minimal side effects.

We also knew that if the trial of 500 men was successful, DNDN could head to the FDA for permission to start selling the drug called Provenge. And that analysts from here to China will talk up the drug’s billion dollar potential. And the 30,000 men in the United States who die of prostate will have a new option.

If it failed, the stock would plummet. Layoffs would follow. The field of research would be written off. And the 30,000 men in the United States who die of prostate cancer will not have that new option.

By April 14 on good news, we walked with gains on 338% and 245% because we bought early enough. We knew based on previous clinical trial results, that success was likely to follow. We had no insider knowledge. We just went off of history.

By April 27, 2009, we were in Dendreon once again, cashing out two days later with gains of 43%, 25%, 41% and 23%. Here was the actual alert from that buy:

We expect Dendreon to explode even further to the upside… but this is speculation going into the Urological Association meeting.

Dendreon will provide more detail on Tuesday with regards to Provenge and its possible impact on tens of thousands of men. It’s a vaccine that boosts the body’s immune system to fight prostate cancer. The company hopes that shortly after releasing more information it can get regulatory approval to get the drug to market by 2010.

Right now, though, it’s Tuesday that we’re looking forward to. That’s when a large crowd of urologists and investors will gather to hear the presentation of pivotal clinical trials of Provenge… and when we could get our next big profit boost. From what we’re hearing the meeting will happen at 2:20 pm central time.

And for a good long while after that, the news cycle was pretty dry for the stock.

But by March 1, 2010, we were in and out again within three days with gains of 65% and 71%.

This time, Dendreon (DNDN) was presenting updated data from its Phase III Provenge study at the ASCO Genitourinary Cancers Symposium… and we expected nothing but good news, which we got.

And all we needed to do to profit from Dendreon was (1) be in the right place at the right time; and (2) hold the holy grail of biotech investing – the White Oak Docket.

— Ian Cooper
Investment Director, Options Trading Pit

P.S..  One of our FDA trades is already up 37% in just six days… and there’s plenty more upside left before Friday’s big decision.  Here’s the information you need to be a part of its run.