Biotech traders do not want dead money sitting in a low volume, sideways trading stock and so biotech traders use catalysts. Biotech investing relies heavily on catalyst events like PDUFA events that move share prices higher. PDUFA dates are deadlines by which the FDA must review new drug applications.

The Prescription Drug User Fee Act (PDUFA) authorizes the FDA to collect fees from companies that produce certain human drug and biological products. PDUFA established three types of user fees: application fees, establishment fees, and product fees. Since the passage of PDUFA, user fees have played an important role in expediting the drug approval process.

The final FDA decision to approve or not approve a new product occurs on the Prescription Drug User Fee Act (PDUFA) meeting date. The PDUFA date is the final step in the formal regulatory pathway.

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