🎯 Phase 2: Micro-Cap Catalyst Trading Strategy¶

Focus: Small biotech/pharma companies with binary catalyst events Risk: Very High (clinical stage, pre-revenue) Reward: 50%-500%+ potential on wins Win Rate Target: 40-50% (lower than momentum, but huge winners compensate)

📊 Current Watchlist Status (Oct 14, 2025)¶

✅ At or Below Entry Targets:¶

1. SNGX - Soligenix - Current: $1.64 - Your Entry: $3.15 - STATUS: Wayy below entry (price has dropped significantly since watchlist created) - ACTION NEEDED: Research what happened - is thesis still valid or broken?

2. FBIO - Fortress Biotech - Current: $2.74 - Your Entry: $3.75 - STATUS: Below entry by 37% - NOTE: You already have FBIO in paper account (down -26.9%) - ACTION: This is NOT working - consider exit

⚠️ Above Entry Targets:¶

3. CABA - Cabaletta Bio - Current: $2.80 - Your Entry: $1.90 - STATUS: Up 47% since watchlist created - ACTION: Wait for pullback OR raise entry if thesis strengthened

4. TNXP - Tonix Pharma - Current: $10.02 - Your Entry: $0.55 - STATUS: Up 1720%! (Likely reverse split occurred) - ACTION: Needs complete re-evaluation - price structure changed

🚨 Critical Insight: Watchlist is STALE¶

Your micro-cap watchlist was created in September 2025. It's now October 14, 2025.

What this means: - Catalyst dates have likely passed - Prices have moved significantly - Theses may be invalidated - FBIO is actively losing money in your paper account

Phase 2 needs FRESH micro-cap opportunities, not stale watchlist!

🔄 Revised Phase 2: Fresh Micro-Cap Research¶

Step 1: Research Current Catalysts (Today)¶

Where to find micro-cap catalysts:

BiopharmCatalyst.com (Free)
Upcoming FDA decisions
Clinical trial readouts
Earnings with drug updates
Filter: Next 30-60 days
StockTwits + Twitter
Search: #biotech #catalyst #FDA
Follow: @BiopharmCatalyst
Look for: Upcoming PDUFA dates, trial data
SEC Filings (edgar.sec.gov)
Search recent 8-Ks for clinical updates
Look for unexpected positive data
Finviz Screener
Market Cap: Under $300M (micro)
Sector: Healthcare
Average Volume: >100K
Filter unusual volume spikes

Step 2: Evaluate New Candidates¶

For each micro-cap catalyst play, check:

✅ Catalyst Quality - Is it binary? (FDA decision, Phase 3 results) - Is it soon? (Next 2-4 weeks ideal) - Is it meaningful? (Can move stock 50%+)

✅ Company Quality - Cash runway: >6 months - Insider ownership: >10% - Recent financing: Not desperate - Management: Track record of success

✅ Technical Setup - Price: Not at all-time highs - Volume: Picking up before catalyst - Resistance: Room to run above

✅ Risk/Reward - Downside: -30% to -50% if fails - Upside: +100% to +300% if succeeds - Position size: Small! (Max $500-$1000)

Step 3: Position Sizing for Micro-Caps¶

Critical: These are HIGH RISK plays!

Per Position: - Max: $500-$1000 - Never more than 2-3% of portfolio - Use PAPER first for new names

Portfolio Level: - Max 3-5 micro-cap positions at once - Total micro-cap exposure: <10% of portfolio - Keep 90%+ in cash/safer plays

Why small? - 1 in 3 micro-caps go to zero - Volatility can trigger stops quickly - Illiquidity = hard to exit - But winners can 5x-10x, so small position still meaningful

📋 Phase 2 Micro-Cap Workflow¶

Week 1: Research & Paper Test¶

Day 1-2 (Oct 14-15): Fresh Catalyst Research 1. BiopharmCatalyst.com - Find 5-10 upcoming catalysts 2. Filter to: Next 30 days, Phase 2/3 trials or FDA 3. Research each company (15 min each) 4. Narrow to top 3

Day 3-4 (Oct 16-17): Deploy to Paper 1. Enter 2-3 positions in Alpaca Paper 2. $500 each 3. Set stops at -30% to -40% 4. Document catalyst date and thesis

Day 5-7 (Oct 18-20): Monitor - Check news daily - Watch for early catalyst data leaks - Adjust position if needed

Week 2: Selective Live Deploy¶

Only if: - ✅ Catalyst still upcoming - ✅ No negative news emerged - ✅ Technical setup still good - ✅ Conviction high

Then: - Deploy $500-$1000 to live - Same stop levels - Set calendar alert for catalyst date

🎓 Learning from FBIO (Currently -26.9%)¶

What went wrong: - Entry at $3.75, now $2.74 - Down $20 in paper account - Likely catalyst passed or disappointed

Lessons: 1. Timing matters: Enter close to catalyst (not months before) 2. Update watchlist: Monthly at minimum 3. Check news: What changed since September? 4. Exit losers: If thesis breaks, get out

Action on FBIO: - Exit in paper account (take the $20 loss as learning) - Don't deploy this to live - Focus on FRESH opportunities

🎯 Alternative: Safer Micro-Cap Approach¶

If pure catalyst plays seem too risky:

Option 1: Micro-Cap Momentum¶

Same as big-cap momentum strategy
But screen for $100M-$500M market cap
Higher volatility = bigger moves
Example: How REI worked for you (+5.6%)

Option 2: Leveraged Biotech (LABU)¶

You already have this (+27%)!
3x leverage on biotech index
Less risk than individual microcaps
Still captures biotech upside

Option 3: Sector Baskets¶

Buy 5-10 micro-caps in same sector
Diversifies single-stock risk
Still gets sector momentum
Like a custom ETF

💡 My Recommendation for Phase 2¶

Given your current portfolio:

Keep LABU (+27%) - Working well, already have exposure
Exit FBIO (paper) - Take learning, move on
Fresh research - Find 2-3 NEW micro-cap catalysts
Small positions - $500 each in paper first
Diversify - Also deploy to proven momentum plays (NVDA-style)

Split capital: - 70%: Proven momentum strategy (like NVDA) - 20%: Leveraged ETFs (like LABU - already working) - 10%: Fresh micro-cap catalysts (high risk/reward)

This gives you upside from micro-caps without over-exposing to the risk.

🆘 Want Help?¶

I can:

Research fresh micro-cap catalysts
Check BiopharmCatalyst for upcoming events
Analyze top 3-5 candidates
Give go/no-go on each
Analyze specific micro-caps you find
"Is XYZ biotech a good play?"
I'll check catalyst, financials, technicals
Update your watchlist
Research what happened to CABA, TNXP, SNGX, FBIO
Determine if any still playable

What would be most helpful?