Please ensure Javascript is enabled for purposes of website accessibility

Will the FDA Wake Up to This Drug's Potential?

By Maxx Chatsko - Apr 8, 2013 at 6:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This promising, next-generation drug has encountered a series of delays since 2008. Can it finally gain approval in 2013 on its way to blockbuster potential?

It is easy for biotech investors to get antsy when it comes to approvals from the Food and Drug Administration. The odds are so heavily stacked against each drug candidate that successful phase 3 trial results are often accompanied by a big sigh of relief. Investors might think: "The therapy worked as planned, now all the FDA has to do is sign a few papers and we're off!" Depending on the severity of safety concerns, that's generally the case.

Not so for sugammadex, a next-generation anesthesia reversal agent from Merck (MRK 0.83%), which failed to gain FDA approval in its first submission in early 2008. Rejection came despite getting the nod in Europe and gaining a unanimous approval recommendation from an FDA Advisory Committee. Although it's not rare to see varying opinions on drugs between the FDA and its European counterpart, I'm not sure of any other examples that have taken more than five years to be resubmitted.

There's a first time for everything, I guess, as the company is expecting a decision on the drug in the second half of this year. Why does it matter? Sugammadex (marketed as Bridion) had worldwide sales of only $261 million in 2012, but several analysts at JPMorgan have estimated that sales could grow to almost $1 billion in 2020 with FDA approval. That would offset a sizable chunk of falling sales from former megablockbuster Singulair.  

How it works
If you undergo surgery, then chances are you'll get a healthy dose of anesthesia. The drugs in general anesthesia do several things, the most important of which is inducing a neuromuscular blockade -- or paralysis of your muscles. This is necessary in surgical applications for obvious reasons.

Equally important in a surgeon's toolbox is the ability to reverse the neuromuscular blockade. The problem with current methods is twofold: (1) They are outdated and have not been improved much in the last several decades, and (2) they come with elevated cardiovascular risks (remember, your heart is a muscle). Sugammadex selectively binds to rocuronium, the main neuromuscular blocking agent in anesthesia, while sparing other enzymes related to nerve function. Therefore, it comes with improved cardiovascular stability.   

Another thing to consider is the benefit in the operating room. By using a reversal agent, doctors can can slash between 12 minutes and 46 minutes off each surgery according to one study. That saves valuable time and money for hospitals and patients. Sugammadex builds upon that advantage by reversing the neuromuscular block in as little two minutes

Potential opportunity
Is an approval imminent? I think it's highly likely this time around. The drug now has five years of safety data from Europe to present to the FDA. Investors must also remember that the first time sugammadex was on the FDA's desk in 2008, the agency was still reeling from the public backlash of Vioxx (also from Merck). That may have left the FDA with the need to be overly cautious at the time, which is one theory as to why the relatively safe sugammadex was rejected in the first place. Investors should definitely consider the upcoming FDA decision this time around as a potential opportunity for Merck to add to its portfolio and potentially boost its revenue. 


Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
$93.08 (0.83%) $0.77

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.