It's the binary news events -- clinical trial results and FDA approvals -- that make drug developers so fun to invest in and so hard to stomach, sometimes at the same time. Let's take a look at a pair of companies expecting FDA decisions next month.
Third time's a charm?
Investors in Discovery Laboratories
Discovery Labs has already received two approvable letters for Surfaxin, a drug used to prevent respiratory death syndrome (RDS) in premature infants. Clinical trials showed the drug worked as well, if not better, than GlaxoSmithKline's
The most recent approvable letter focused on manufacturing and stability of the drug -- not efficacy or safety. Assuming the company has taken care of business and answered all the agency's questions, an approval seems pretty likely at this juncture.
Avoiding long-term use
It's not exactly something drug companies want to encourage their patients to do -- use less of their drug -- but Adolor
Rather than wait for the FDA to send them a rejection letter, Adolor and marketing partner GlaxoSmithKline fixed their risk-management plan in February, which brings us to a May 10 decision date.
Given the high praise for the efficacy of Entereg by both the advisory committee and the FDA, the drug's chance of approval seems pretty good. The only snafu could come if the agency still doesn't like the risk-management plan, which could lead to an additional delay.
The "D" in PDUFA doesn't stand for "deadline"
It bears reminding that these dates are set by the Prescription Drug User Fee Act (PDUFA), which requires drugmakers to pay the FDA to review their applications in a timely manner -- 10 months for a standard review. But these PDUFA dates aren't set in stone. These are not deadlines that the FDA is guaranteed to make. Recently, with the FDA being strapped for cash, we've seen a few missed; Cardiome
On the other hand, the agency can actually make a decision before the PDUFA date. Progenics Pharmaceuticals'
Fools don't need another reason not to day trade, but counting on a government agency should certainly persuade anyone from trying to get in and out of these stocks quickly before and after the decisions are made. Investors are better off trying to pick the companies that are most likely to gain FDA approval and then buy in well ahead of the PDUFA date.
Approved or not approved, that is the question
I think both Surfaxin and Entereg have a great chance of being approved next month. The drugs appear to work quite well, so the only question is whether management has addressed all of the FDA's concerns.
It's time to put your mouse where your mouth is and give your opinion on whether Surfaxin and Entereg will be approved. After you vote, feel free to leave a message on our discussion boards as to your reasoning.
Fool contributor Brian Orelli, Ph.D., recently had to rewrite an article because the FDA made a decision early. He doesn't own shares of any company mentioned in this article. Glaxo is a selection of the Income Investor newsletter. The Fool has a disclosure policy.