The Food and Drug Administration doesn't call them final-decision committees; they're called advisory committees. And for good reason: They advise, but the FDA always has the final say.
In March, the advisory committee voted 9-3 to recommend approval of pirfenidone. As I wrote at the time, there was still a lot of risk in not getting an approval. The Motley Fool Rule Breakers team came to the same conclusion and recommended that members sell their shares because the risk didn't seem to justify the rewards.
The FDA's beef with pirfenidone appears to be that only half of its phase 3 trials came back positive. Normally the FDA requires two independent phase 3 trials to gain approval, but there was hope that the FDA would waive that requirement because IPF is a life-threatening lung disease. The advisory panel's vote fueled that belief, but even within the vote, there was a sign that that the advisory panel was voting on hope, not the rigorous standards the FDA employs: The panel wasn't quite as lopsided -- just 7-5 in favor -- when asked whether "pirfenidone provides a clinically meaningful beneficial effect in the treatment of patients with IPF to reduce decline in lung function."
Pirfenidone's hopes for an approval aren't completely dead. Like Provenge, the FDA will require a new trial, and if it comes back positive, it's likely the agency will approve the drug. InterMune has an advantage over Dendreon: an additional positive trial has already been conducted by another company, Shionogi, which has the rights to the drug in Japan. The FDA may let InterMune use that data, but investors won't know for a few months until InterMune meets with the FDA. Even then, it may take the company a while to resubmit its marketing application; the data for each individual patient in the trial will have to be translated.
Whether you owned InterMune yesterday or not, the moral of this story is the same: FDA advisory committees recommend, but the agency has the final say. Print it out. Plaster it on your wall. If you want to be a successful biotech investor, never forget it.