Side Effects? What Side Effects?

Food and Drug Administration advisory committee briefing documents almost always have a negative feel to them. After all, if there were nothing bad to say about the drug, the FDA wouldn't really need a panel of outside experts to review it. That happened to Bristol-Myers Squibb's (NYSE: BMY  ) Yervoy, and it's the reason investors are bullish on an approval of Exelixis' (Nasdaq: EXEL  ) cabozantinib.

But most drugs aren't perfect. There's almost always something bad to say about a drug. As the saying goes, "Show me a drug without side effects, and I'll show you a placebo."

The briefing documents for NPS Pharmaceuticals' (Nasdaq: NPSP  ) Gattex didn't disappoint. The FDA pointed out multiple issues with the short-bowel syndrome drug but then concluded, "The agency does not believe that access to Gattex for SBS should be restricted or require elements to assure safe use."

It looks to me like the FDA is telling the committee it will approve the drug unless the committee points out some gaping hole in the agency's logic. The last drug I saw given such a strong endorsement was Onyx Pharmaceuticals' (Nasdaq: ONXX  )  Kyprolis. The drug got an 11-0 recommendation for approval and was subsequently approved by the FDA.

Investors should watch the committee meeting on Tuesday, but I'll be shocked if a majority of the committee members don't vote in favor of approving the drug. Given the strongly positive briefing documents, it won't take a unanimous vote to get through the agency; a solid majority should be enough.

Investors should pay attention to exactly what the doctors on the panel say about the safety concerns, because they could foreshadow how sales of the drug might go. Even if the doctors echo the FDA's view that the side effects aren't serious enough to keep the drug off the market, they might also signal that the side effects, including a cancer risk, might move the drug further back in the treatment paradigm. Merck KGaA's Zorbtive and Emmaus Medical's NutreStore are both approved to treat short-bowel syndrome. And patients can choose to stay on intravenous nutrition, although that has convenience and side-effect issues of its own.

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Fool contributor Brian Orelli has no positions in the stocks mentioned above. The Motley Fool owns shares of 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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