A Brief Overview of FDA events

Knowledge of FDA events can provide information for biotech stock investing in the form of trading catalysts. Biotechnology stocks often gyrate up or down when news breaks regarding events. This binary movement of biotech stocks makes investing a roller coaster ride of emotions and brokerage account balance.

Preclinical Investigation – Company performs laboratory experiments, manufacturing validation and animal studies to show safety and effectiveness.

Investigational New Drug – Company applies to the FDA for permission to test the drug/biologic in humans. If approved moves to Phase I.

Phase I – Small study of healthy volunteers to determine if the drug is safe. In some cases patients may be used and different dosages will be tried.

Phase II – A larger study where safety and effectiveness are tested in people with the disease.

Pre-Phase III – Meeting – Company and FDA meet to discuss the criteria upon which the study will be deemed successful. In some cases a special protocol assessment (SPA) is worked out so that the company and FDA agree on how the study will be performed, the statistical analysis and the primary endpoint(s). If all of these conditions are met the likelihood of approval should increase.

Phase III – A large clinical investigation to test for the effectiveness of the drug. Safety is closely watched since the number and diversity of the patients increase.

New Drug Application (NDA) – A very large set of documents is submitted to the FDA requesting approval to market the drug. The final decision usually comes within 6 or 10 months. Six months for priority review and ten months for standard review. The FDA issues an accept/reject to file letter within 60 days.

Accept/Reject to File Letter – The FDA is does a cursory review of the application and determines if the NDA application is worthy of a full and complete review. This letter is given to the company within 60 days of the NDA filing. If accepted a PDUFA Date is set.

FDA Briefing Documents – These documents are often released 2 days prior to an FDA Advisory Committee (AdComm) meeting. These documents detail the points of discussion for the Advisory Committee meeting. FDA concerns and issues are usually presented in these documents and can hint at the outcome of the AdComm meeting.

FDA Advisory Committee Meeting – These are meetings held to discuss treatments with upcoming PDUFA dates. These are often specifically focused on one company or can be to discuss a more broad topic such as obesity and weight loss drugs.

PDUFA Date – The date by when the FDA will determine if the drug is approved. The PDUFA date is either 6 months (Priority Review) or 10 months (Standard Review) from the date of the initial NDA application.

Complete Response Letter (CRL) – The FDA issues a complete response letter when the drug will not be approved in its present form. Complete response letters will only be issued for applications that are not approved. The CRL indicates that the application can not be approved in its present form. However, there is no implication regarding the ultimate approvability of the application. The FDA may require new statistical analysis, more information about the manufacturing process or request additional data which can only be obtained through additional clinical trails. These are just a few examples of the myriad of reasons a CRL is issued. A CRL asking for more clinical trial data can mean years and millions of dollars before the NDA can be submitted. On the hand, a request for additional statistical analysis or additional manufacturing process documentation can take only a few months.

Approval – The FDA grants permission for the company to market the drug in the U.S. In some cases the FDA may require a phase IV study to follow-up on concerns of safety or other issues.