Public trading strategy
Biotech M&A frenzy kicks off with $10.6B deal — target the next takeover candida
Thesis
Large drugmakers are facing patent expirations and desperately need new drugs to sell. GSK's $10.6 billion purchase of Nuvalent proves they are willing to pay massive premiums to get them. As this deal-making frenzy continues, other mid-sized biotech firms with successful cancer or obesity treatments could become the next takeover targets, making them attractive investments right now.
Strategy approach
Build a rule-based strategy that scans for small-to-mid cap biotech stocks (market cap $2B-$15B) trading on the NASDAQ. Enter long when a stock's money flow index (MFI) crosses above 80 on the daily timeframe. Set a wide 8% stop loss and a 15% take profit to allow for volatile swings.