The Food and Drug Administration doesn't call them final-decision committees; they're called advisory committees. And for good reason: They advise, but the FDA always has the final say.

InterMune's (Nasdaq: ITMN) investors are learning that the hard way today because the stock is down 75% after the FDA declined to approve the company's idiopathic pulmonary fibrosis (IPF) drug, pirfenidone.

In March, the advisory committee voted 9-3 to recommend approval of pirfenidone. As I wrote at the time, there was still a lot of risk in not getting an approval. The Motley Fool Rule Breakers team came to the same conclusion and recommended that members sell their shares because the risk didn't seem to justify the rewards.

Dendreon's (Nasdaq: DNDN) Provenge is the most famous case of the FDA declining to approve a drug that an advisory committee had recommended, but there have been others. Schering-Plough's -- now Merck's (NYSE: MRK) -- Bridion and Remoxy from King Pharmaceuticals (NYSE: KG) and Pain Therapeutics (Nasdaq: PTIE) were both rejected after positive panel votes. And just last week, Bristol-Myers Squibb's (NYSE: BMY) kidney transplant drug belatacept was sent back to the drawing board after an advisory panel recommended approving the drug by a 13-5 vote.

The FDA's beef with pirfenidone appears to be that only half of its phase 3 trials came back positive. Normally the FDA requires two independent phase 3 trials to gain approval, but there was hope that the FDA would waive that requirement because IPF is a life-threatening lung disease. The advisory panel's vote fueled that belief, but even within the vote, there was a sign that that the advisory panel was voting on hope, not the rigorous standards the FDA employs: The panel wasn't quite as lopsided -- just 7-5 in favor -- when asked whether "pirfenidone provides a clinically meaningful beneficial effect in the treatment of patients with IPF to reduce decline in lung function."

Pirfenidone's hopes for an approval aren't completely dead. Like Provenge, the FDA will require a new trial, and if it comes back positive, it's likely the agency will approve the drug. InterMune has an advantage over Dendreon: an additional positive trial has already been conducted by another company, Shionogi, which has the rights to the drug in Japan. The FDA may let InterMune use that data, but investors won't know for a few months until InterMune meets with the FDA. Even then, it may take the company a while to resubmit its marketing application; the data for each individual patient in the trial will have to be translated.

Whether you owned InterMune yesterday or not, the moral of this story is the same: FDA advisory committees recommend, but the agency has the final say. Print it out. Plaster it on your wall. If you want to be a successful biotech investor, never forget it.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.