title: Company stock prices before and after public announcements related to oncology drugs.
abstract: BACKGROUND
  Phase III clinical trials and Food and Drug Administration (FDA) regulatory decisions are critical for success of new drugs and can influence a company's market valuation. Knowledge of trial results before they are made public (ie, "inside information") can affect the price of a drug company's stock. We examined the stock prices of companies before and after public announcements regarding experimental anticancer drugs owned by the companies.
  
  
  METHODS
  We identified drugs that were undergoing evaluation in phase III trials or for regulatory approval by the US FDA from January 2000 to January 2009. Stock prices of companies that owned such drugs were analyzed for 120 trading days before and after the first public announcement of 1) results of clinical trials with positive and negative outcomes and 2) positive and negative regulatory decisions. All statistical tests were two-sided.
  
  
  RESULTS
  We identified public announcements from 23 positive trials and 36 negative trials and from 41 positive and nine negative FDA regulatory decisions. The mean stock price for the 120 trading days before a phase III clinical trial announcement increased by 13.7% (95% confidence interval = -2.2% to 29.6%) for companies that reported positive trials and decreased by 0.7% (95% confidence interval = -13.8% to 12.3%) for companies that reported negative trials (P = .09). In a post hoc analysis comparing the stock price averaged over 60 trading days before and after day -60 relative to the clinical trial announcement, the mean stock price increased by 9.4% for companies that reported positive trials and decreased by 4.5% for companies that reported negative trials (P = .03). Changes in company stock prices before FDA regulatory decisions did not differ statistically between companies with positive decision and companies with negative decisions.
  
  
  CONCLUSIONS
  Trends in company stock prices before the first public announcement differ for companies that report positive vs negative trials. This finding has important legal and ethical implications for investigators, drug companies, and the investment industry.
authors.affiliation: Department of Medicine, Mount Sinai Hospital, 600 University Avenue, Toronto, ON, Canada.
authors.forename: Jeffrey M
authors.initials: JM
authors.lastname: Rothenstein
authors.forename: George
authors.initials: G
authors.lastname: Tomlinson
authors.forename: Ian F
authors.initials: IF
authors.lastname: Tannock
authors.forename: Allan S
authors.initials: AS
authors.lastname: Detsky
mesh_terms: D000970:Antineoplastic Agents / Q000191:economics / Q000627:therapeutic use; D017326:Clinical Trials, Phase III as Topic; D003132:Commerce; D015986:Confounding Factors, Epidemiologic; D003415:Crime / Q000191:economics / Q000517:prevention & control; D017277:Drug Approval; D004345:Drug Industry / Q000191:economics*; D006801:Humans; D007449:Investments; D008402:Mass Media; D017149:Private Sector / Q000191:economics / Q000941:ethics / Q000331:legislation & jurisprudence; D012189:Retrospective Studies; D013997:Time Factors; D016896:Treatment Outcome; D014481:United States; D014486:United States Food and Drug Administration
chemical_list: D000970:Antineoplastic Agents