Part 2
The Deep Dive Checklist
Every stock that survives Layer 1 gets run through a five-section deep dive. This is where the real
work happens — and where most people give up. Each section has specific questions that must be
answered before any capital gets deployed.
Section E didn’t exist until a stock I was planning to enter got hit with an OAI classification at its
manufacturer. The drug had two positive Phase 3 trials published in JAMA, a $354 million capital
raise from top-tier biotech funds, and a PDUFA 60 days away. None of that mattered — the factory failed inspection and the approval is dead until they switch manufacturers and resubmit. I added the
manufacturing filter the same day.
CRL Recovery Assessment
Not all Complete Response Letters are created equal. A CRL for insufficient clinical data is very
different from a CRL for manufacturing issues, which is different from a CRL for safety concerns.
When a stock has CRL history, I run a separate assessment: What was the CRL reason? Did the
FDA provide a clear path forward? Was the path followed? Is this a resubmission designed per FDA
guidance? How did the market react to the original CRL?
CRL history can create the best setups in the entire scanner. The market remembers the rejection
and prices in permanent skepticism. But if the FDA told the company exactly what to fix, and the
company fixed it with data so strong the trial was stopped early, and a $100 billion pharma company
is backing the resubmission — that’s not a red flag. That’s scar tissue creating a discount you can
trade.
PIPE Overhang Framework
Every PIPE offering creates a price level that acts as both a floor (institutions defend their cost basis)
and a ceiling (institutions sell to break even). When current price is below the PIPE price, you’re
getting a better deal than the institutional investors who just backed the company. When current price
is at or near the PIPE price, expect resistance. If PIPE shares exceed 20% of the pre-existing float,
expect a prolonged ceiling effect. I track the PIPE price as my primary support and resistance reference on every position.
Position Sizing and Exit Rules
The framework doesn’t just tell you what to buy. It tells you how much and when to sell. These rules
exist because the first instinct on a high-conviction trade is always “go bigger.” The rules say no.
Tier Quadrant Max % of Portfolio Hold Strategy
Full Position Grand Slam / Orphan Blockbuster Up to 30% Hold through PDUFA
Lottery Ticket Crowded Large / Override 5–15% Sell into spike immediately
Skip Small Incremental / multi-fail 0% Do not enter
Exit Rules by Quadrant
Grand Slam / Orphan Blockbuster (Full Position):
On approval: sell 50% into the spike (first 30 minutes to 2 hours), hold 50% for the commercial ramp.
On CRL: sell 100% at open unless the CRL is manufacturing-only with a clear fix and a strong
partner. Pre-PDUFA: if the stock runs 100%+ before the decision, sell 25% to lock in gains.
Crowded Large / Lottery Ticket:
On approval: sell 100% into the spike within the first 30 minutes. Do not hold. Warrant overhangs and
commercial competition grind the price after the initial pop. On CRL: sell 100% immediately. No
second chances on lottery tickets. Pre-PDUFA: if the stock runs 50%+ before the decision, selleverything and take the win.
Stop Loss References:
Below the PIPE floor price means institutional support has cracked — exit or reassess immediately.
Below cash-per-share value means the fundamental floor is broken — exit. A 30% drawdown from
entry triggers a forced reassessment. Not an automatic sell, but you must explicitly justify continued
holding with an updated thesis.
Portfolio-Level Risk Caps
Maximum 50% of total portfolio deployed at any time — the rest stays in cash for dip-buying and new
opportunities. Maximum 3 simultaneous PDUFA positions with catalyst dates in the same 30-day
window. If all active positions were to fail simultaneously, the maximum acceptable drawdown is 35%
of total portfolio. If projected worst-case exceeds that, reduce position sizes until it doesn’t.
The Dead Ticker Graveyard
Every stock the scanner kills goes here. Each one looked interesting for about 30 seconds before a
filter ended it. This is the section most biotech newsletters will never show you — the stocks they
looked at and walked away from. The discipline is the edge.
Ticker Setup Kill Reason
CING ADHD drug, positive Phase 3, PDUFA 80% warrant coverage — dilution absorbs entire upside
ACHV Smoking cessation, 2 Phase 3s in JAMA Manufacturer OAI — company expects CRL, not approval
GANX Parkinson’s G Case activator, Phase 1b $1.94 price, 4 employees, sub-$20M cap, years from NDA
ETON 8 marketed products, $720M cap, $23 Commercial platform — not a binary PDUFA trade
SYRE $6B cap, Phase 2 IBD pipeline Already ran 500%, no NDA, no PDUFA — momentum story
VIR HDV + oncology, $1.67B cap Phase 3 enrolling, no PDUFA, insider selling
SPRB MPS IIIB enzyme replacement, BTD $53 price, BLA not filed, 1.3M share float
GRCE IV nimodipine for rare condition Small TAM + incremental — skip quadrant
ORMP Oral insulin, Type 2 diabetes Failed Phase 3, 4 employees, zombie holding company
Dead tickers can be resurrected to Layer 2 (never directly to Layer 1) if the specific kill reason has
been materially resolved. ACHV is a current example — originally killed for going concern and sub-$3
price, resurrected after a $354M raise and price recovery. But resurrection requires a fresh full deep
dive and the original kill reason must be demonstrably fixed, not explained away.
Lessons Learned — Built Into the Scanner With Real Money
Every rule in this framework exists because something went wrong. The scanner didn’t start at
version 2. It started at version 1, and version 1 had gaps that cost money or nearly cost money.
Here’s what I learned and what I changed:
Lesson What Happened Rule Added
Manufacturing kills PDUFA’s A stock with clean data and a $354M raise got killed by a factory inspection. The drug works. The factory doesn’t
Section E: Manufacturing and Supply Chain filter
CRL history can be opportunity A stock trading at 57% of fair value because of a prior CRL — but the FDA drew the fix roadmap and the compaCRL Recovery Assessment protocol
PIPE overhangs are real ceilings Two stocks bounced off their PIPE prices repeatedly, creating predictable resistance PIPE Overhang Framework with support/resistance rules
Most tickers fail the scanner12 of 18 tickers screened in first session were instant kills. Selectivity is the strength. Documented dead ticker graveyard
Don’t oversize on conviction. The urge to put 45% of portfolio in one name because the thesis was “perfect” 30% max per position, 35% max portfolio drawdown cap
Catalyst clustering requires planning Three PDUFAs in 12 days with limited cash — can’t make sizing decisions in real time Catalyst Clustering Protocol with ranked conviction sizing
Emotional baggage is your edge A stock at $2.52 despite resolved risks because previous investors got destroyed at $25 CRL scar tissue = depressed valuation = potential opportunity
What Survived This Month’s Scan
Three names passed every filter and got full deep dives. Two are Grand Slam or Orphan Blockbuster
quadrant with full positions. One is a Crowded Large with a Layer 1 Override, sized as a lottery ticket. All three have PDUFA dates in June 2026 — a 12-day catalyst cluster that the scanner was built for.
I’m not publishing the specific tickers, share counts, cost basis, or trade plans here. That’s the paid
tier — not because the system is secret (you just read the whole thing), but because publishing
micro-cap positions before entry moves the stocks. Paid subscribers get the deep dives, the entries,
the daily P&L tracking, and the real-time PDUFA week coverage.
Here’s what I can tell you about what survived:
Survivor 1 Survivor 2 Survivor 3
Quadrant Grand Slam Orphan Blockbuster Crowded Large (Override)
PDUFA June 2026 ~Dec 2026 (BLA filing June) June 2026
Designation Resubmission BTD + Surrogate Endpoint BTD + Priority Review
Cash Risk None — partner-funded None — $300M+ None — $750M+
Dilution Risk Near zero PIPE overhang at known level Low
Position Full Full Lottery ticket
Paid subscribers get the full deep dive on each — the science, the regulatory path, the financials,
the warrant math, the manufacturing check, the exact trade plan with entry, stop, and exit targets.
Plus daily scans tracking every position through the June cluster.
What You Get
Content Frequency Tier
Monday PDUFA Calendar Scan Weekly Free
Dead Ticker Graveyard Biweekly Free
Framework Updates + New Rules As earned Free
Educational Posts (CRL anatomy, PIPE mechanics, dilution math) Biweekly Free
Post-PDUFA Recaps (honest accounting) After each catalyst Free
Daily Portfolio Scan with Real P&L Every market day Paid
Full Deep Dives on Layer 1 Survivors Per survivor Paid
Trade Plans (entry, stop, exit targets) Per position Paid
PDUFA Week Live Coverage During catalyst windows Paid
Monthly Scorecard (hit rate, total returns) Monthly Paid
You’ve just read the entire system. Every filter. Every rule. Every lesson learned from real money and
real mistakes. Most newsletters won’t show you this because the system is their moat. Mine isn’t —
the execution is.
Subscribe free to get the weekly scan every Monday. Upgrade to paid to watch me run the
system in real time — real positions, real P&L, real accountability. The June PDUFA
cluster starts in 45 days. Three binary events in 12 days. This is what the scanner was
built for.
Not financial advice. I hold positions in stocks discussed and will always disclose them. Biotech trading involves substantial
risk of total capital loss. The Catalyst Scanner documents my personal research process — nothing published here is a
recommendation to buy or sell any security. I am not a licensed financial advisor, broker, or analyst. Do your own due
diligence. Past results don’t predict future performance.