Please ensure Javascript is enabled for purposes of website accessibility

3 Upcoming FDA Decisions We're Most Excited About

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

Here's how Acadia, Intercept, and Clovis Oncology could win big in 2016.

Photo source: flickr.com.

Interested in what biotechs might soon bag an important new drug approval? Then the Motley Fool has a treat for you today.

Below, three of our contributors share their picks for biotechs on the cusp of a make-or-break FDA decision. The upside of a green light is huge considering how much the odds are stacked against an investigational compound making it all the way to approval.

It takes about 12 years for an experimental drug to travel from the laboratory to your medicine cabinet, and the chances it will make it are a meager one in 5,000. According to Forbes, the overall cost of creating a new drug averages $5 billion. Of course, that takes into account all the failures; companies don't spend that on each drug.

The good news is that about 80% of drugs that made it through the gauntlet of clinical testing to Phase III gain FDA approval. So, when a drug gets close to receiving a regulatory decision, investors should be on high alert.

Brian Feroldi: One upcoming FDA decision that I'm especially excited to hear about is for ACADIA Pharmaceuticals' (ACAD -0.85%) Nuplazid, which was submitted last last year as a potential treatment for psychosis associated with Parkinson's disease, or PDP.

The National Parkinson Foundation estimates that roughly 400,000 Americans suffer from PDP, which can cause hallucinations and delusions and places a huge burden on caregivers. In phase 3 trials, Nuplazid was shown to lower the impact that PDP had on patients' lives when compared to placebo, and it also helped improved patients' sleep cycles. Nuplazid helped to reduce the burden placed on caregivers, and the results were seen regardless of the patient's age, sex, or race.

With no other approved drugs on the market to treat PDP, the FDA granted Nuplazid with breakthrough therapy designation and has given it a priority review. The target PDUFA decision date is May 1, 2016 .

This date should be exciting for investors, as well, as peak sales for Nuplazid are currently running around $2 billion. That number could grow considerably in the future, too, since Nuplazid is also being studied as a treatment for Alzheimer's Disease Psychosis and Schizophrenia. If Nuplazid gets the green light on May 1st, then it bodes well for the drug's chances with future conditions. I, for one, am excited to see what will happen.

Sean Williams: The PDUFA decision I'm most looking forward to is Intercept Pharmaceuticals' (ICPT 2.81%) obeticholic acid as a treatment for primary biliary cirrhosis, or PBC, an autoimmune disease that causes bile acids to build up and destroy the liver.

Originally, obeticholic acid, also known as OCA, was slated to be approved (or given a complete response letter detailing what would need to be corrected for approval) in February. However, additional data requests from the Food and Drug Administration wound up pushing the PDUFA date back three months, to May 29, 2016. The FDA also set up a panel review for April 7, 2016.

Even though Intercept was clear that the extension was merely a formality of the FDA asking for more data, it's unnerving to investors considering the potential safety concerns surrounding OCA following the midstage FLINT study for nonalcoholic steatohepatitis, or NASH. Following FLINT, some OCA patients exhibited a rise in LDL-cholesterol (the bad kind) and had other adverse reactions. The delay in OCA's PDUFA decision may have only exacerbated these worries among shareholders.

On the flip side, OCA was wildly successful in treating PBC. As noted in the late-stage POISE trial, 47% and 46% of patients in the 10 mg OCA and 5-10 mg OCA cohorts met the primary endpoint, respectively, whereas just 10% of patients in the placebo cohort met the primary endpoint. The adverse events noted were also similar between OCA and the placebo.

This first approval could be a big one for OCA and Intercept because it would presumably give OCA a clearer path to approval in NASH if late-stage study data proves encouraging. NASH could be a multi-billion indication for Intercept's OCA; this is the reason why the May 29 PDUFA date is so exciting in my book.

Cheryl Swanson: There aren't many bargains left in biotech, but I see a potential big one coming in Clovis Oncology (CLVS -6.43%).

Wall Street lost confidence in Clovis' management last November, when the FDA delayed review of its fast-tracked drug rociletinib.The stock promptly crashed 70% and has gone nowhere since. Why?

While the FDA ended up pushing review back only three months (until June 28, 2016), that gave AstraZeneca's competing lung cancer treatment a chance to leap ahead. AstraZeneca's drug Tagrisso will now be an established treatment before rociletinib reaches commercialization. And that is not what the market expected.

So where's the value in Clovis? The market is acting as if rociletinib is dead, but the FDA saw enough in the clinical data to delay, not kill, the review. At this point, it's likely rociletinib will eventually get approved.

And even if something does go wrong -- which is always possible with drug approvals -- Clovis has another highly promising drug, rucaparib, a PARP inhibitor for ovarian cancer in late-stage trials. Rucaparib clocks in with a $1 billion peak sales forecast.

Rociletinib is also under accelerated assessment in the EU, with a decision expected in mid-2016, and it's being tested in tandem with a Roche checkpoint inhibitor to see if it could have a positive add-on effect. Clovis is a high-risk stock, but it's worth remembering that the pendulum swings both ways in biotech. If rociletinib gets the FDA nod, that will do a lot to restore faith in Clovis' management, and this stock could head skyward again.

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

Clovis Oncology, Inc. Stock Quote
Clovis Oncology, Inc.
CLVS
$2.25 (-6.43%) $0.15
Acadia Pharmaceuticals Stock Quote
Acadia Pharmaceuticals
ACAD
$15.14 (-0.85%) $0.13
Intercept Pharmaceuticals Stock Quote
Intercept Pharmaceuticals
ICPT
$15.57 (2.81%) $0.42

*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 analyst team.

Stock Advisor Returns
323%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

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.