"I Built a Stock Scanner That Killed 80% of the Biotech Stocks I Looked At. Here's What Survived."

Last month I screened 18 small-cap biotech stocks with upcoming FDA decisions. 15 of them failed my filters before I even opened a chart. The 3 that survived are set up for 2-5x moves in the next 60 days — and I’m putting real money behind them.

This is the first post from Catalyst Scanner, where I document my entire process for finding and trading FDA binary catalysts in small-cap biotech. Real positions. Real cost basis. Real P/L. No paywalled “alerts” with no accountability. Just a system, applied publicly.

Let me show you how it works.

Why Most Biotech Trades Lose

Here’s what a typical retail biotech trade looks like: you see a stock mentioned on Twitter or Reddit, you check the pipeline — Phase 3 data looks good, FDA decision is coming up — and you buy. Then one of these things happens:

The company does a toxic PIPE offering at a 30% discount two weeks before the FDA decision. Or the stock has 80% warrant coverage that will absorb the entire approval pop. Or there’s a going concern warning buried in the 10-K that nobody read. Or a third-party manufacturer fails an FDA inspection and the approval gets delayed by a year.

The drug worked. The data was clean. You still lost money.

I know because I’ve been on the wrong end of all of these. I got tired of doing the science right and the trade wrong. So I built a system.

The Full System

The scanner has three layers. Layer 1 is the primary screen that kills most stocks instantly. Layer 2

catches future candidates. Layer 3 is the early watchlist. Everything starts at Layer 1.

Layer 1: The Primary Screen

Run every Monday morning against the FDA PDUFA calendar. Every stock with an upcoming

approval decision gets fed through these filters in order. If it fails any single filter, it’s dead. No

exceptions. No “but the science is really good.” Dead.

Primary Filters — ALL Must Pass

PDUFA Date 60–180 days out (sweet spot for entry timing)

Clinical Data Phase 3 completed with positive results

NDA Status Accepted by FDA (not just filed)

Market Cap $20M–$500M (sweet spot $30M–$200M)

Stock Price $3–$15 (above penny stock, room to move)

Analyst Coverage 2+ analysts with price targets

Secondary Filters — Deal-Breakers If Failed

Cash Runway Must extend past PDUFA date — no going concern risk

Dilution Check No 80%+ warrant coverage, no toxic PIPE near PDUFA

Cap Structure No ATM programs bleeding shares into catalyst window

Expected CRL If company pre-announced expected CRL, PDUFA is dead

Manufacturing No OAI classification at manufacturer — this kills PDUFA

The manufacturing filter didn’t exist in version 1 of the scanner. I added it after watching a stock with

clean data, two positive Phase 3 trials, and a $354 million capital raise get killed by a GMP inspection

at a third-party manufacturer. The company pre-announced it expects a Complete Response Letter

instead of an approval. The drug works. The factory doesn’t. Lesson learned, filter added.

Layer 1 Override Rule

A stock that fails ONE non-critical primary filter (market cap slightly above $500M or price slightly

above $15) can be promoted to Layer 1 if it passes every other filter and has a confirmed PDUFA

within 90 days. Position sizing is capped at lottery ticket level. Two or more filter failures means the

stock doesn’t qualify — the override can’t be stacked.

The TAM × BIC Quadrant System

This is the most important refinement in the entire framework. Approval probability tells you the odds.

TAM × BIC tells you the magnitude. A drug with 75% approval odds in a crowded market with six

competitors is a fundamentally different trade than a drug with the same odds that’s the first and only

therapy for a rare disease at $370,000 per year.

Same odds. Completely different position sizing.

Quadrant TAM BIC Position Sizing

Grand Slam Large ($1B+) First / Best-in-class Full position — hold through PDUFA

Orphan Blockbuster Smaller, high-value Dominant in niche Full position if pricing supports

Crowded Large Large Me-too / incremental Lottery ticket only

Small Incremental Small Incremental Skip entirely

Three BIC questions for every deep dive:

1. Is this first-in-class or genuinely superior to existing options?

2. What is the realistic peak sales number if launched successfully?

3. Is there M&A premium potential — would a large pharma acquire this?

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