So you just got a BTD for your top drug? Don't be sur­prised to see the en­thu­si­asm fiz­zle fast among in­vestors

We’ve al­ready seen stud­ies spot­light­ing how the FDA’s break­through ther­a­py des­ig­na­tion can lead doc­tors and pa­tients to get un­rea­son­ably pumped about a drug — even though that was nev­er the idea. But it seems that in­vestors have be­come large­ly im­mune to the buzz, at best los­ing in­ter­est quick­ly.

How do we know?

A group of re­searchers took a list of 218 BTDs, sliced away the ex-US and pri­vate com­pa­nies, and then tracked the stock re­ac­tion to the an­nounce­ment. Di­vid­ing the list in­to com­mer­cial and pre-com­mer­cial out­fits, they found that the more ma­ture com­pa­nies es­sen­tial­ly saw no re­sponse in the tick­er price. The less ma­ture pre-com­mer­cial biotechs got a clear pop on their stock price, but that just last­ed a few days and then quick­ly fiz­zled.

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