How much do stock increase after approval of FDA NDA?

The impact of FDA approval on stock prices varies significantly depending on the context and the specific drug or medical device being considered. Here's a detailed analysis:

1. Historical Trends: Historically, the market has shown a positive response to FDA approval announcements, with stock prices often increasing after approval. This is particularly true for large-cap pharmaceutical companies and their innovative drugs.

2. Stock Price Increase Magnitude: The extent of the stock price increase can vary widely. For example, a study examining stock prices before and after public announcements regarding experimental anticancer drugs found that the mean stock price for the 120 trading days before a phase III clinical trial announcement increased by 13.7% for companies reporting positive trials. However, the actual increase can be more or less, depending on factors such as the drug's market potential, competition, and investor expectations.

3. Timing of the Increase: The stock price increase is not immediate but often occurs over time as the approval process progresses and becomes more certain. Investors who are aware of the PDUFA dates, which are the FDA's target completion times for drug reviews, can anticipate the potential approval and adjust their investments accordingly.

4. Investor Sentiment and Market Dynamics: The market's response is influenced by investor sentiment and the overall market conditions. Positive sentiment towards healthcare and pharmaceuticals, along with a strong demand for innovative drugs, can contribute to a more robust stock price increase after FDA approval.

5. Risk and Volatility: While FDA approval can be positive, it also carries risk. If a drug fails or if the market perceives the drug's benefits as overstated, the stock price can decrease after approval. This was observed in some cases where the market had already priced in the approval, leading to a more muted response or even a decline in the stock price if the drug's prospects are revised downward.

6. Individual Company Factors: The stock price response can also be affected by company-specific factors such as financial health, competitive position, and the market's perception of the company's ability to bring drugs to market successfully.

In conclusion, while FDA approval can be a catalyst for a stock price increase, the actual magnitude and timing of the increase depend on a complex interplay of factors, including the drug's characteristics, market conditions, and investor sentiment.