A Mostly Meaningless FDA Approval

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Johnson & Johnson (NYSE: JNJ) announced Wednesday afternoon that its HIV drug, Intelence, gained full approval from the Food and Drug Administration. It seems entirely fitting that it was announced on a day when few investors were paying attention; it wasn't much of an event, since Intelence has already been on the market for almost two years.

The HIV drug was approved under an accelerated approval process, in which the FDA accepts a minimal amount of data and expects the drugmaker to complete further studies to gain a full approval. Only drugs that treat life-threatening diseases like HIV or cancer are eligible for the accelerated approval process.

More often than not, as was the case for Intelence, the full data comes back positive and the FDA signs off on the drug. But there's always the possibility that the drug won't work as well as it first appears -- it happened to AstraZeneca's (NYSE: AZN) Iressa, for instance. The only thing worse than seeing a drug company fail to get a drug on the market is seeing one no longer able to market a drug that's already there.

Intelence is only approved for HIV patients who have developed resistance to other medications. Fortunately (for the patients), that's a relatively small market. In order for Johnson & Johnson to approach the sales of top-selling HIV drugs like Gilead Sciences (Nasdaq: GILD) and Bristol-Myers Squibb's (NYSE: BMY) Atripla, or Abbott Labs' (NYSE: ABT) Kaletra, Johnson & Johnson will need to get Intelence approved to treat patients earlier in the disease progression. Those studies are currently under way.

In the meantime, investors will have to be content with whatever low level of sales Intelence brings in -- Johnson & Johnson doesn't bother to break them out -- and be satisfied knowing that the FDA has given the drug its full stamp of approval. Yay.