SAN FRANCISCO -- It's been called the "ASCO effect." Shares in biotech and pharmaceutical companies routinely jump on the release of positive research results at the American Society of Clinical Oncology annual meeting. With this year's meeting set to start Saturday, investors can try to profit from the "ASCO effect" by buying the stock of companies as they take the wraps off their research. But they'd be late.
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The First Thing"The first thing we did on April 10 was comb through the ASCO abstracts and start taking long and short positions," says one doctor who consults for hedge funds. "The information is a gold mine ... especially for those that are medically sophisticated." The trading of the stocks involved in the conference this year appears to back up the doctor's assertion. For instance, shares in Imclone Systems ( IMCL), a small New York biotech firm that will use ASCO as a major coming-out party, jumped 12% on six times its average trading volume on April 10. Millennium Pharmaceuticals ( MLNM), a biotech firm that's expected to present promising early data for its experimental cancer drug, LDP-341, saw its stock climb 7% on April 10.
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Imclone, Millennium and OSI climbed when ASCO released studies before its annual meeting.