Today, specialty drugmaker Encysive Pharmaceuticals (NASDAQ:ENCY) is likely to receive a regulatory decision in the U.S. for its lead drug, pulmonary arterial hypertension (PAH) treatment Thelin.

Encysive has a spotty record when it comes to bringing Thelin to market. The drug failed to receive marketing approval in the U.S. after the FDA issued two approvable letters for the compound last year. Despite these stumbles, Thelin has been approved for marketing in locales like the European Union, Canada, and Australia.

Encysive finished a full response to the FDA's last approvable letter in December and is now awaiting a reply from the agency. Let's consider the evidence and see if we can get a better handle on the likelihood that Thelin gets final approval in Encysive's third attempt.

Is another approvable letter on its way?
Betting against the FDA is generally not a good idea for investors. Here are statements from Encysive's past press releases about Thelin (emphasis mine):

The action letter contains concerns and observations that must be satisfied prior to achieving approval, including a request for additional clinical trial work.

The FDA acknowledged that the unresolved item is a matter of judgment and expressed an openness to consider new arguments to address this remaining item (in the approvable letter). The FDA again offered the alternative of conducting additional clinical work.

If the FDA is asking for more studies of Thelin and Encysive hasn't done additional clinical trial work besides the ongoing long-term study, this does not do much to instill confidence in Thelin's approvability in the near term.

What could that last approvable letter issue be? There are several theories floating about. One, proposed by a very astute reader of mine who did in-depth research on the subject, is that the FDA likely issued the approvable letters and called for more clinical trial work as a result of sloppy record-keeping by at least one of the investigators in a pivotal phase 3 study of Thelin.

This warning letter, likely sent to one of the investigators running the main Thelin efficacy and non-inferiority study against Actelion's PAH treatment, calls into doubt the accuracy of the data Thelin has produced in this study.

The exact name of the study the warning letter refers to is partially redacted in the FDA correspondence. If you look at the official title of this Thelin study and the partially redacted name of the study in the warning letter, it's easy to make the connection that the warning letter is likely about this phase 3 Thelin study.

Some of the deficiencies for which the FDA cited this investigator included a failure to "maintain adequate records of the disposition of the drug, including the dates, quantity, and use by subjects" and a failure to "follow the protocol-specified guidelines" for one of the main efficacy endpoints of a study.

When Thelin failed to gain regulatory approval by the FDA last year, I was very surprised, considering that the drug appeared to have successfully met a Special Protocol Assessment (SPA) that Encysive had with the FDA. If this theory about bad record-keeping holds, it could explain the disconnect between the drug's two approvable letters and its apparent success on the SPA objective.

The sloppy data theory may also explain why the company has been so tight-lipped about the reason for the approvable letter. For example, having to say that the FDA is unhappy about the accuracy of data from one of your clinical trials wouldn't do wonders for your stock's price, which is important when you need a higher stock price to limit dilution from the share offering that keeps the company running. These types of issues could also be used as ammunition in the marketing war that is sure to ensue between all the different PAH compounds.

This theory could also explain the FDA's call for more clinical trial data despite Encysive amassing the largest number of patients in an initial PAH regulatory filing.

All this is just speculation as to the reason for the Thelin approvable letter. There is still the chance that Encysive has rectified the one outstanding issue that has been holding up the drug's U.S. marketing. But without knowing what the last approvable letter issue is, it's incredibly difficult to place any confidence in Encysive's abilities to assuage the FDA's hesitance over Thelin, especially now that the quality of its clinical trials (and management's forthrightness) may be in doubt.

Final thoughts
It's worth mentioning that the June 15 Prescription Drug User Fee Act, or PDUFA, date for Thelin is just the goal for when the FDA will make a decision on the compound. It's not unusual to have to wait another couple of days, or even longer, for a regulatory decision. Hearing no word on a compound shortly after the PDUFA date is generally not something investors should worry about, and it doesn't decrease the odds of a drug's chances for approval.

Adding spice to the FDA regulatory decision is that a very similar compound, Ambrisentan from Gilead Sciences (NASDAQ:GILD), has its PDUFA date scheduled for Monday.

If the data can be relied upon, anyone who says that Ambrisentan has produced better efficacy or safety data than Thelin just hasn't looked at the efficacy and safety data produced for both compounds throughout all the clinical trials. While no head-to-head studies have been completed yet (since neither drug is approved for marketing), Thelin has produced better efficacy and safety data than Ambrisentan in some of its studies; the situation is reversed in others.

Nonetheless, if Ambrisentan and Thelin both get approved in the U.S., then tiny Encysive will be at a huge disadvantage in the marketing war that will occur between the drugs, because of the size and experience of Gilead's sales staff.

One important aspect of biotech investing is that it almost always pays to make your bets where the preponderance of evidence lies. In the case of Thelin, with all the evidence out there, I'm highly doubtful on its chances for approval when the FDA makes a decision on the drug this time. This doesn't necessarily mean that the stock is overvalued at these levels, but I wouldn't count on seeing Thelin marketed in the U.S. any time soon.

Encysive is a Motley Fool Rule Breakers recommendation. Find out why with a free 30-day subscription to the newsletter.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.