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Some years later in the late 80's, I remember another order mistake. I was using a new commodity cycles program I had designed. In fact, it’s the same one I use today for clients called "The TimeLine&qu

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

ot;. I feel comfortable with it. That’s half the battle. Anyway, I bought four coffee futures contracts at about 58 cents. I was looking for an explosive time cycle move up. Sure enough, the coffee market st

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

rted creeping higher over a week or so. After a couple more weeks it started to run and coffee hit about 70 cents. That was a big score for me, something like $18,000. But that’s not the end of the story.

H

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

re’s how the error occurred: The morning I exited, I had a resting GTC trailing stop in at 68 to sell four coffee futures to close out. I had just gotten one of those nifty hand-held quote devices that work

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

ff the FM band. Remember those? That was a big mistake. Watching that thing just ruined my long-term perspective. But this time was different. Somehow I recognized a top and called the trading desk to sell everyt

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ing at the market. I almost caught the exact top. It was just luck. So I took a car ride thinking I was out of the market with an $18K score. Time to celebrate! I was so smart! Not so fast, Tom.

When I got home I

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

heard a message on the answering machine from the trading desk. I called them and the clerk said I forgot to cancel my GTC sell stop at 68 selling four futures contracts. I sheepishly asked him what coffee closed

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

at. He said, “limit down!” I was up another $4,000!

But again, not so fast, Tom. The trading manager (with a hoarse, gruff voice, of course) got on the phone and said he called before the market close

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

to see if I wanted to keep the trade. He said because he couldn’t reach me, he covered the the four contracts without me. And then he barked, “This profit is going into the company error account!&rdqu

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

; He said it with so much authority, I thought that’s the way it was. That’s how it worked, I said to myself. I was so pumped up at just making $18,000 how could I be greedy and demand the extra $4,000

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

also?

BUT…what would have happened if the coffee futures market had gone limit-up instead? Do you think the trading manager would have demanded the loss go into the “error account” then? No way

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

. I would have eaten that as sure as day. In hindsight, I could have told him that it was my intent to stop and reverse; and in fact I should still be in the coffee futures market and short. What right did he have

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

without a signed management authorization agreement to liquidate me?

If it happened today it would be a different story. I probably would offer to split it, being such a nice guy. [grin] But it was a long time

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

go and I didn't know any better. He probably laughed and shook his head afterwards. As Robert Redford said at the end of The Sting… “I‘d just blow it anyway”. Knowledge learned is more val

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

able than money. Gann said something to the effect, “Once you have the knowledge, it’s easy to make money in commodities”. I suppose I can rationalize anything.

So there you have it...two order

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

rror stories. One lost me $1500 and the other made me $4,000 – well, made the brokerage firm $4,000, I should say. This taught me the importance of having a novice commodity futures trader paired up with an

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

experienced, mentoring broker. It is so important to have someone on the other end who knows your situation and can flag mistakes before they get out of hand. In these two cases, there was the potential to wipe ou

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

many years of discount commission savings.

If you’re new to the commodity futures and option trading game, consider going slow for a while and working with someone you trust. Once you get the basics down,

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

ou can ramp it up with confidence. I know some experienced commodity futures traders who will only work with a full-service commodity broker. There's a lot of traders like this out there. They know the risk of err

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

rs and what it can do to your ego and bottom line.

Good Trading!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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