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FDA Picks Up the Pace, Investors Rejoice

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What are they putting in the Food and Drug Administration reviewers' coffee these days? Or maybe they're just drinking more of the caffeine-laden stuff. Whatever the case, the agency has been on fire with the speed of drug approvals lately.

At least one division has
The latest benefactor was Bayer and Onyx Pharmaceuticals' (Nasdaq: ONXX  ) Stivarga, which was approved yesterday, a full month ahead of the prescription drug user fee goal date of Oct. 27. Medivation's (Nasdaq: MDVN  ) Xtandi was approved three months early.

The common theme for both drugs: They treat cancer, so at least the Office of Hematology and Oncology Products is drinking that coffee. It isn't clear that the other divisions have shifted gears yet.

Part of the reason for the early approval likely has to do with both Stivarga and Xtandi having fast-track status. The FDA gives drugs that indication if they treat a serious disease and fill an unmet need, which describes most cancer drugs.

The fast-track status allows companies to get more frequent meetings and written correspondence to ensure that the right clinical trials are being run. Companies with fast-track status can also submit their application on a rolling basis, which allows the agency to review the data as it's turned in rather than once the entire package is complete.

Quick, but only for approvals
I can't think of an example in which the FDA has rejected a drug substantially early. Sure, the FDA has rejected drugs a few days early, but that's always been the case. Dendreon's (Nasdaq: DNDN  ) first rejection for Provenge came about a week early. We haven't seen rejections coming months early like we've seen with the approvals.

That's almost counterintuitive since it should be easier to find one thing wrong with a drug than to thoroughly check out the drug for all of the potential red flags before approving the drug. But the FDA is likely trying to be helpful by taking time to figure out exactly what the agency wants to ensure an approval on the second attempt.

If this dichotomy continues, the approval and rejection times will only get further apart since the new PDUFA allows for longer review times. The lack of an early approval could start to be a sign that a drug might not be approved. Instead of the typical run-up into the binary event, we might see a run-down as investors start to freak out, expecting a rejection as the PDUFA date approaches.

Who's next?
The FDA canceled the advisory committee meeting for Exelixis' (Nasdaq: EXEL  ) cancer treatment cabozantinib, which could be a sign that its next on the early approval list. The drug was supposed to be reviewed by a panel of outside experts on Nov. 8-9, a few weeks before the PDUFA date of Nov. 29. Reading between the lines, the FDA probably canceled the meeting because it's leaning heavily toward approving the drug. And if it's already that close to making a decision, it doesn't seem like it should take two more months to hand it down.

ARIAD Pharmaceuticals (Nasdaq: ARIA  ) just completed the FDA application for its leukemia drug ponatinib, but the company seems to be setting itself up for a quick approval. Since ponatinib had fast-track status, ARIAD has been turning in data since late July. Investors also don't have to worry about the approval of a companion diagnostic for ponatinib since the FDA said it didn't need to be approved by the agency.

I think both drugs could get approved, and it seems likely they'll get approved early. But even with the new speed at the FDA, nothing has really changed; getting approved is still much more important than whether it takes three months or six months to gain approval. Good drugs are still going to get approved, but only because they're good drugs, not because the FDA is moving quicker.

Fool contributor Brian Orelli has no positions in the stocks mentioned above. The Motley Fool owns shares of Dendreon and Exelixis. Motley Fool newsletter services recommend Exelixis. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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