BioFinBERT: Finetuning Large Language Models (LLMs) to Analyze Sentiment of Press Releases and Financial Text Around Inflection Points of Biotech Stocks

TL;DR

BioFinBERT is a finetuned language model designed to analyze the sentiment of biotech press releases and financial texts, helping understand stock movements around clinical and regulatory inflection points.

Contribution

The paper introduces BioFinBERT, a novel finetuned LLM specifically adapted for financial sentiment analysis in the biotech sector, leveraging biomedical language models and financial data.

Findings

BioFinBERT accurately detects sentiment shifts in biotech press releases.

The model correlates press release sentiment with stock price movements.

BioFinBERT outperforms generic sentiment analysis models in this domain.

Abstract

Large language models (LLMs) are deep learning algorithms being used to perform natural language processing tasks in various fields, from social sciences to finance and biomedical sciences. Developing and training a new LLM can be very computationally expensive, so it is becoming a common practice to take existing LLMs and finetune them with carefully curated datasets for desired applications in different fields. Here, we present BioFinBERT, a finetuned LLM to perform financial sentiment analysis of public text associated with stocks of companies in the biotechnology sector. The stocks of biotech companies developing highly innovative and risky therapeutic drugs tend to respond very positively or negatively upon a successful or failed clinical readout or regulatory approval of their drug, respectively. These clinical or regulatory results are disclosed by the biotech companies via press releases, which are followed by a significant stock response in many cases. In our attempt to design a LLM capable of analyzing the sentiment of these press releases,we first finetuned BioBERT, a biomedical language representation model designed for biomedical text mining, using financial textual databases. Our finetuned model, termed BioFinBERT, was then used to perform financial sentiment analysis of various biotech-related press releases and financial text around inflection points that significantly affected the price of biotech stocks.