Developing new drugs is a long, difficult, and very risky process. Less than 12% of drugs reach the point of being reviewed by the U.S. Food and Drug Administration (FDA) for potential approval.

Three biotechs that have reached this critical milestone with their respective new drugs and await key FDA approval decisions in June are Array BioPharma (NASDAQ:ARRY), GW Pharmaceuticals (NASDAQ:GWPH), and Incyte (NASDAQ:INCY). Here's what the FDA's upcoming decisions mean for each of these biotechs.

Businessman holding small card with "FDA approved" printed on it

Image source: Getty Images.

1. Array BioPharma

Array BioPharma hopes to win FDA approval by June 30, 2018, for a combination of encorafenib and binimetinib in treating patients with BRAF-mutant advanced, unresectable, or metastatic melanoma. If approved, Array will move from the ranks of clinical-stage biotechs to having its first drug on the market.

Encorafenib inhibits production of the BRAF protein. Around half of all melanoma patients have mutations in the BRAF gene that causes abnormal BRAF protein to be produced that helps melanoma cancer cells flourish. Binimetinib is a MEK inhibitor that targets enzymes believed to be involved in cancer cell growth.  

The combination of these two drugs worked very well in a phase 3 study conducted by Array. Patients taking the encorafenib-binimetinib combo achieved a median overall survival rate of 33.6 months -- nearly double the median overall survival rate for patients taking Roche's Zelboraf.

2. GW Pharmaceuticals

GW Pharmaceuticals could be on track to become the first company ever to win FDA approval for a plant-based cannabinoid drug. An FDA approval decision on Epidiolex in treating Dravet syndrome and Lennox-Gastaut syndrome (LGS), both rare forms of epilepsy, is expected by June 27, 2018. 

The active ingredient in Epidiolex is cannabidiol (CBD), which is already available in states that allow the use of medical marijuana. However, GW Pharmaceuticals' drug uses a very high therapeutic dosage compared to other CBD products. Only three drugs based on marijuana have been approved by the FDA so far. However, all three of these drugs use synthetic versions of cannabinoids. Epidiolex, on the other hand, is made from CBD extracted from marijuana plants.

Expectations are high for Epidiolex. GW Pharmaceuticals reported great results from several phase 3 clinical studies of the drug. Market research firm EvaluatePharma projected that Epidiolex could be one of the 10 biggest new products launched in 2018, and that the drug could generate sales approaching $1 billion by 2022.

3. Incyte

Incyte and its partner Eli Lilly (NYSE:LLY) hope that the second time will be the charm for baricitinib, also known by its brand name Olumiant. The rheumatoid arthritis drug was turned down by the FDA last year. However, Incyte and Lilly regrouped quickly and filed for approval again in January 2018. The FDA is expected to announce its decision sometime in June.

Baricitinib is a JAK inhibitor. JAK enzymes are involved in causing several inflammatory and autoimmune diseases, including rheumatoid arthritis. Two JAK inhibitors from other companies have already won FDA approval. Several other JAK inhibitors are also in late-stage clinical development.

An approval for baricitinib is more important for Incyte than it is for Lilly. Incyte experienced a huge clinical setback in April with the failure of a combination of once-promising epacadostat and Merck's blockbuster immunotherapy Keytruda in treating melanoma.

Most likely to succeed

Two of these three drugs have already faced FDA advisory committees. Array's combo doesn't have to go before a committee for review. Epidiolex won a unanimous recommendation of approval from the panel reviewing the drug.

However, it was a split decision for baricitinib. The FDA advisory committee voted to recommend the lower 2 mg dose of the drug, but not the 4 mg dose. While the FDA doesn't have to follow the recommendations from its advisory committees, it's usually a pretty good predictor of how drugs under review will fare.

I suspect that Array BioPharma, GW Pharmaceuticals, and Incyte will all receive green lights from the FDA for their respective drugs. But which is most likely to succeed in the marketplace? I think it just might be GW's cannabinoid drug Epidiolex.

Peak sales estimates for Array's combo of encorafenib and binimetinib are in the ballpark of $250 million. At one point, analysts thought that baricitinib could generate peak annual sales of around $2 billion. However, I think that level is very unlikely if the 4 mg dose doesn't obtain FDA approval. There's just too much competition on the way for the drug to become that big of a winner, in my view.

Some are skeptical that Epidiolex will get anywhere close to the $1 billion sales mark. Others, though, are even more optimistic. Goldman Sachs, for example, thinks the drug will achieve peak sales of $2.2 billion. I'm not sure Epidiolex will be quite that successful, but I do expect the drug will become a blockbuster for GW.

Investors should keep in mind, though, that much of this anticipated success is already baked into the price of GW Pharmaceuticals' stock. The biotech's market cap currently stands at more than $4.5 billion. While I think GW Pharmaceuticals still has some room to move higher, don't count on the stock skyrocketing if Epidiolex wins FDA approval.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.