The reaction of sponsor stock prices to clinical trial outcomes: An event study analysis
Name
journal.pone.0272851.pdf
Description
Published version
Size
1.34 MB
Format
Adobe PDF
Checksum (MD5)
78e0634e3b99b32b522e093b54af0aba
Author(s)
Singh, Manish
Rocafort, Roland
Cai, Cathy
Siah, Kien Wei
Lo, Andrew W
Date Issued
2022
Journal
PLOS ONE
Publisher
Public Library of Science (PLoS)
Citation
Singh, Manish, Rocafort, Roland, Cai, Cathy, Siah, Kien Wei and Lo, Andrew W. 2022. "The reaction of sponsor stock prices to clinical trial outcomes: An event study analysis." PLOS ONE, 17 (9).
Version
Final published version
Abstract
We perform an event study analysis that quantifies the market reaction to clinical trial result announcements for 13,807 trials from 2000 to 2020, one of the largest event studies of clinical trials to date. We first determine the specific dates in the clinical trial process on which the greatest impact on the stock prices of their sponsor companies occur. We then analyze the relationship between the abnormal returns observed on these dates due to the clinical trial outcome and the properties of the trial, such as its phase, target accrual, design category, and disease and sponsor company type (biotechnology or pharmaceutical). We find that the classification of a company as “early biotechnology” or “big pharmaceutical” had the most impact on abnormal returns, followed by properties such as disease, outcome, the phase of the clinical trial, and target accrual. We also find that these properties and classifications by themselves were insufficient to explain the variation in excess returns observed due to clinical trial outcomes.
MIT Department
Massachusetts Institute of Technology. Department of Electrical Engineering and Computer Science
Sloan School of Management. Laboratory for Financial Engineering
Sloan School of Management
Massachusetts Institute of Technology. Computer Science and Artificial Intelligence Laboratory
Terms of Use
Creative Commons Attribution 4.0 International license
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1371/journal.pone.0272851
