The Biotech Stock Checklist: 14 Boxes, Tested on 22,234 Past Setups
This biotech stock checklist has 14 boxes in five groups: money, owners, catalyst, science and price. We tested it on 22,234 past biotech stock-months. Stocks with 10 or more boxes green rose 50% or more in six months 22.8% of the time, against 13.3% for the average biotech, and fell 30% or more about half as often.
The 14 boxes
Money (4 boxes)
- Cash at least equal to the company's market value
- Enough cash for 18 months or more
- Low dilution risk
- Insiders bought $250,000 or more in the last six months
Owners (3 boxes)
- Three or more hedge funds hold the stock
- At least one of them is a biotech specialist
- Days to cover of 5 or more
Catalyst (1 box)
- A trial readout or FDA date within six months
Science (5 boxes)
- A drug in Phase 3
- A trial success score of 50% or more
- A randomized, double-blind trial design
- An FDA designation (such as fast track or orphan drug)
- A competition score of 50 or more (few rivals)
Price (1 box)
- The stock is at least 35% below its 52-week high
How the checklist did in our test
We scored every biotech at every month-end from June 2022 to March 2026, using only what was known on that date, then looked at the next six months.
| Boxes green | Rose 50%+ / fell 30%+ / median |
| 0 to 3 | 8.7% / 27.7% / -7.1% |
| 4 to 5 | 14.5% / 24.1% / -2.7% |
| 6 to 7 | 16.9% / 23.1% / -1.9% |
| 8 to 9 | 19.8% / 16.3% / +7.1% |
| 10 or more | 22.8% / 13.5% / +10.4% |
More green boxes meant better odds, step by step. That is the useful part. The honest part: even at 10 or more boxes, about 13 in 100 stocks still fell 30% or more.
Real setups that worked
Rhythm Pharmaceuticals (RYTM), June 2022. Ten boxes green: four funds, two of them specialists, cash above its market value, a Phase 3 drug with a randomized, double-blind design, and a stock 70% below its high. Six months later it was up 621%.
Kodiak Sciences (KOD), July 2025. Only eight boxes, but six funds, three of them specialists, and a stock 40% below its high. Up 287% in six months, with a 58% jump in one day in September.
Others from the same test: Travere (+230%), Stoke (+270%), Rezolute (+220%), Corvus, Amylyx (+186%) and Nuvation Bio (+134%). Every one of them is walked through in the video below.
Two that failed, and why
PTC Therapeutics (PTCT), April 2023. Nine boxes green, but the stock was at its high and cash was only 7% of its value. A Phase 3 trial missed in May, and the stock ended down 66%.
Biohaven (BHVN), September 2024. Ten boxes green, seven funds, and about $20 million of insider buying. But cash was 9% of its value and would last under eight months. Down 52%.
Both misses had red boxes in the money group. Neither had cash close to its market value. The checklist narrows the field. It does not remove the risk.
How to use the checklist
- Screen for companies that pass the money boxes first. They decide how bad a miss can get.
- Check the owners and the catalyst date.
- Read the science boxes on the company page.
- Keep each position small. Odds are not promises.
See it live: Most of the 14 boxes are on one company page: cash, runway, funds, insiders, short interest, trials and FDA dates.
Open the Company Screener →Watch the video walkthrough
Prefer YouTube? Watch it there.
Frequently asked questions
Start with the money (cash, runway, dilution risk), then who owns it (hedge funds, insiders, short interest), then the next catalyst, then the science (phase, trial design, FDA designations, competition), and finally the price compared with its 52-week high.
At least: cash compared with market value, months of runway, dilution risk, insider buying, fund ownership, days to cover, the next catalyst date, the lead drug's phase and trial design, FDA designations, competition, and how far the stock is from its high.
Not reliably. Stocks with 10 or more boxes green beat the average biotech on both upside and downside in our test, but they beat the XBI biotech ETF less than half the time (44%). The checklist improves the odds; it is not an index-beating system.
In our test, cash at least equal to market value added the most upside of any single check, and none of the high-scoring misses we studied had it. The science boxes mainly reduced the chance of a big drop.
Yes, as long as you can find the data. It works best on small and mid-size biotechs that depend on a few drugs. For large drug makers, most of the boxes matter much less.
Educational content only. Not financial advice. Past results don't predict future ones.