Red Flags

It’s a tough thing for retail investors to lose hard-earned money.

I stand to lose close to six figures on this one — thankfully, I’ll recover, as it was a smaller position and I’ve had worse. This is the fourth company in 12 months that hasn’t worked out, and it’s a sobering reminder of the risks we take investing in speculative stocks — especially in biotech.

I’m starting this thread as a place for reflection and shared learning. In hindsight, red flags often seem obvious, but in the moment, optimism, FOMO, and confirmation bias can cloud our judgment.

So here’s the question:
What were the red flags that you now see clearly, but previously overlooked, rationalised, or ignored — and why?

I’ve tried to list a few of my own below. Please contribute yours — the goal is to learn, not to wallow. If we can sharpen our future decision-making, maybe something good can come from this.

Red flags I missed or brushed aside:

• Directors had no skin in the game — I rationalised this away because of the high level of institutional investment (e.g. Regal).

• Heavy sell-down in the final 30 days — a clear sign of a leaky ship, in hindsight. I missed this completely — I work 50–60 hours a week, manage two acreage properties, and have a young family. Still, no solid biotech sells down hard before a good announcement.

• Narrow pipeline — I knew it was risky, but the potential upside made it feel worthwhile at the time I made the decision to invest.

• Unusual financing structure — I failed to interpret the fine print as a risk rather than a positive, and it now seems this could dissolve the company altogether.

• NASDAQ listing without clear biotech institutional backing — this should have raised more questions than it did.for me

• Phase 2 trial design — 366 patients wasn’t nearly enough. When you remove the favourable subgroups, the benefit was modest at best. OPT-302 only seemed to help narrow populations — in hindsight, a poor basis for a broad Phase 3 success.

What else would you add to the list of red flags?