Approval from the U.S. Food and Drug Administration is a big step in the life of a biotech company. It's the difference between theory and reality, between hopes and money in the bank. FDA approval not only means that a company can start selling its drugs, but also that the company might have a government-sanctioned monopoly (because competitors are kept out unless they, too, can survive the FDA gauntlet).
Here are two companies that are facing imminent judgment from the FDA: Amarin (NASDAQ:AMRN) and Blueprint Medicines (NASDAQ:BPMC). Both of these stocks will be a lot higher, or a lot lower, in 2020. Welcome to biotech stock investing!
Odds that Amarin's drug will be approved for a broader indication: Very high
When Amarin reported its phase 3 results from its fish oil pill last year, the market was ecstatic. The stock was $3 a share before the phase 3 results were announced. Now the stock is almost $21 a share, a 7-bagger in 15 months. The vast majority of that gain was in the first week. Amarin's drug, Vascepa, appears to be a wonder drug for people who have high triglycerides.
What are triglycerides? They are fats in your blood that might cause heart attacks and death. One-quarter of adults in the U.S. have high triglycerides.
Doctors have been debating for years whether we should start paying attention to high triglycerides. European doctors have been sounding the alarm for at least a decade. Dr. Børge Nordestgaard of the University of Copenhagen published multiple studies concluding that high triglycerides cause heart attacks. Nordestgaard said 10 years ago, "What we really need scientifically, we need companies to come up with drugs that are more efficient at particularly reducing triglycerides."
Bingo. Amarin's drug was approved by the FDA in 2012 to do just that. But Amarin was not allowed to market Vascepa as a pill that can reduce heart attacks, strokes, or death unless it could prove it. So, that's what the Irish biotech did.
The study took five years, with more than 8,000 people tested and the results flooring everyone. Vascepa reduced heart attacks by 31% and strokes by 28%. It also decreased death by 20%.
This study strongly suggests that Dr. Nordestgaard was right 10 years ago: that high triglycerides are indeed a killer. Amarin's study proved it and simultaneously demonstrated that Vascepa saves people from a lot of MACE (major adverse cardiovascular events).
The FDA asked a scientific advisory committee to look at the study, and the committee ruled unanimously that the label should be expanded. Of course, the FDA doesn't have to follow a scientific advisory committee, but it would be shocking if the FDA ignored this compelling data. We will find out on Dec. 28, when the FDA makes its final decision.
Odds that Blueprint will have an approved drug: High
Blueprint Medicines is making a lot of confident promises. If it pulls them off, investors will be a lot richer in one year. (Blueprint currently has a market capitalization of $3.74 billion). The company is forecasting that two of its drugs, avapritinib and pralsetinib, will be approved in 2020. Here is the company's "2020 Blueprint" in table form:
|Future NDA Applications||Drugs in the Pipeline||Research Programs|
|November 2019||0||4 planned||3||9|
|December 2020||2||4 submitted||6||8|
Blueprint is currently waiting to hear about two new drug applications filed with the FDA, both for avapritinib, a drug for a type of stomach cancer known as gastrointestinal stromal tumors (GIST). Blueprint's molecule is very specific: It's designed to inhibit a gene, PDGFRA, that is known for producing cancer-causing mutant kinases.
In its phase 3 study, avapritinib shrunk tumors in 86% of patients, which is amazing. The drug also worked in a subset of patients who had cancer so bad that not one, not two, but three drugs failed to help. In this class, Blueprint's drug had a 22% success rate.
Blueprint is seeking front-line status, second-line status, third-line status and fourth-line status for avapritinib. Each one of these requires its own FDA approval. Blueprint has already filed for front-line therapy status (based on the 86% success rate) and fourth-line therapy status (based on the 22% rate in hard-to-treat patients).
Of course, sometimes a drug reduces a tumor and then the cancer comes back. That's why the FDA wants more and more data. If Blueprint fails to pull off its ambitious goals, it will probably be a timing issue (i.e., approval in 2021), not an efficacy or safety issue. So far, the numbers look great.
The company is also predicting that pralsetinib will be approved in 2020. This is a drug for lung cancer, which is a huge, $17 billion market. Blueprint has yet to file its NDA for this drug but plans to do so in the first quarter of 2020.
Sixty percent of patients with lung cancer experienced tumor shrinkage in the phase 3 trial. That's an impressive number, particularly since this was a second-line therapy. What that means is that this class of cancer patients had already been treated with an approved cancer drug, without success. So, that's remarkable efficacy. Even if avapritinib fails (unlikely), Blueprint Medicines ought to have a winner with pralsetinib.