There's nothing like the Food and Drug Administration's archaic system to put a biotech into a tailspin.
Onyx Pharmaceuticals (Nasdaq: ONXX ) is down 5% today after the FDA accepted its application to market carfilzomib for multiple myeloma, but only gave it a standard review. Many people, myself included, expected a priority review, which would result in a six-month review time instead of the standard 10-month type.
It isn't the four-month delay that's troubling. A couple of months of not selling the drug aren't worth that much to Onyx's valuation. The drop today is over a fear that the drug won't be approved at all with the current data.
Onyx is trying to get carfilzomib approved with just phase 2b data without a control arm. While this is not the most conclusive way to run a trial since there's nothing to compare the results to, these are patients who have already failed other treatments: Takeda and Johnson & Johnson's (NYSE: JNJ ) Velcade and Celgene's (Nasdaq: CELG ) Revlimid, among others.
So Onyx turned in less data and got a longer review time. Oh, the irony.
The FDA reserves priority reviews for "drugs that offer major advances in treatment, or provide a treatment where no adequate therapy exists." Carfilzomib would certainly seem to fit the latter part of that definition. And the FDA has been handing out priority reviews like free samples at a factory tour lately. Regeneron Pharmaceuticals (Nasdaq: REGN ) and Bayer got one for Eylea as did Pfizer (NYSE: PFE ) and Bristol-Myers Squibb's (NYSE: BMY ) Eliquis.
But the definition is certainly subjective and the agency seems to be concerned about whether carfilzomib's data to date is sufficient to gain an approval. The drug would likely fall under the accelerated approval program, which would grant an approval pending the outcome of further trial. Carfilzomib isn't dead in the water yet, but the lack of a priority review is a sign that the FDA isn't impressed with the drug, which isn't a good sign at the start of a review process.
Onyx is already running a phase 3 trial, so in the worst-case scenario, the FDA rejects carfilzomib and the biotech has to wait until 2013 to submit the data. A four-month delay isn't a major issue, but two years certainly is.
Keep track of Onyx as it tries to get carfilzomib approved by adding it to the Fool's free My Watchlist service. Just click here to get started.