Pipeline Depth and Stock Price Reactions to Clinical Trial Announcements (An Event Study of US-Listed Small-Cap Pharmaceutical Development Firms, 2014-2024)

Sammanfattning

This thesis explores the relation between US-listed small-cap pharmaceutical development firms' pipeline diversification and the magnitude of share price reactions following the announcement of clinical trial results. We conduct an event study with 739 events across 270 unique companies linked with trial data and stock prices during the period 2014-2024 with the aim of capturing differing abnormal return patterns between firms with broad and narrow research pipelines. We suggest that the higher the number of concurrent trials, the lower the expected magnitude of the effect on the company's share price following the announcement of clinical trial results. We find that the share prices of companies with larger clinical pipelines are significantly less impacted by negative news events relating to the conduct of their clinical trials. Overall, we find mixed evidence that the number of concurrent trials has a significant impact on company stock prices following the announcement of clinical trial outcomes