There are many instances of stocks that have taken off during or after Phase II results, where investors made lots of money but then suffered losses when the drug failed in Phase III. A few real world examples: My subscribers made money on Medivation ( MDVN) despite a disastrous Phase III trial that resulted in the stock plummeting. Medivation had a drug for Alzheimer's called Dimebon. The Phase II results were outstanding. They showed a slower deterioration and fewer side effects than the existing therapies, including Pfizer's ( PFE) Aricept. Despite skeptics' doubts, the stock ran in anticipation of Phase III results. If the data was strong and the drug got approved, it would likely be an immediate blockbuster. After the stock doubled, I recommended that subscribers take half of their profits off of the table. Note, this is not the usual Oxford Club philosophy, but with small-cap biotech stocks that can plummet on one piece of news, I often suggest readers take their risk capital off the table once the stock has risen 100 percent or more. So with investors now playing with the "house's money" after taking their initial investment back, we waited for the Phase III results. It turns out, the drug didn't work. The stock got crushed, and we sold out our remaining position. But because we had sold half at a 100 percent profit, we still pocketed a 37 percent gain. Not bad for a failed drug. There have been several other instances where something similar has occurred. We made 102 percent gains on Delcath Systems ( DCTH) and 42 percent gains on MELA Sciences ( MELA), despite FDA rejections. Although in these cases the Phase III trials were not deemed a failure, the FDA has rejected the applications for approval until more questions are answered. Lastly, after positive Phase II results, you sometimes see the early investors and the venture capitalists exit the position. They've made their money and don't want to stick around for the risky Phase III. If the smart money is leaving, it may be a good idea to follow them out the door. At least with part of your investment.