Information on the clinical trial process in the biotech space is all too readily available. Indeed, we have our own educational material available here where you can read all about the various stages through which a company must carry its pipeline candidates before commercialization. What is less prevalent, however, is information on what happens once the trial process is complete. A company has demonstrated efficacy, safety and tolerability across a range of phase 1,2 and 3 trials – what happens next? Let’s take a look.

First, its important to say that a demonstration of efficacy is far from a guarantee that a drug will receive FDA approval. There are many things the FDA takes into consideration before accepting a drug, and efficacy is just one piece of the puzzle. Obviously, its an important piece, but a piece none the less.

New Drug Application (NDA)

So, let’s get to it. Lets say Pfizer Inc. (NYSE:PFE) announces the meeting of primary and secondary endpoints in a global phase 3 for one of its oncology candidates. Its stock jumps in anticipation of approval, but the work is far from complete for Pfizer. The company needs to put together what’s called a New Drug Application (NDA). You can think of this as an extension of the Investigational New Drug Application (IND) that the company submits before it kicks off trials – but don’t let just thinking of it as an extension fool you. An NDA is often far lengthier and more detailed than an IND, and can be thousands of pages long. It is designed to demonstrate all of the findings from each of the clinical trials the company in question conducted – finding related not just to efficacy but safety, tolerability, pharmacokinetics and much more. Essentially, an IND says to the FDA “look – this is what we think this drug can do and why”. An NDA says “there you go, we proved it – here’s how”.

An NDA also contains a detailed explanation of the commercialization strategy for the drug in question. There’s no point in the FDA approving Pfizer’s oncology candidate if the company is unable to manufacture it on the required scale, or if it is unable to get it to patient delivery sites when needed.

Advisory Panel and PDUFA

Once the FDA accepts an NDA, it will set one, and sometimes two dates of note. The first is a Prescription Drug User Fee Act (PDUFA) date. The Prescription Drug User Fee Act (PDUFA) was set up in 1992 in an attempt to speed up and standardize the FDA approval process. It basically states that the FDA must make up its mind on a particular drug within 10 months of accepting its NDA. Say Biogen Inc. (NASDAQ:BIIB) submits an NDA and the FDA approves it on January 10. The PDUFA date will automatically set as 10 months from the NDA approval, so October 10 in this situation. The FDA can report its decision before this date, and if it has good reasoning, push the date back, but in the majority of straightforward approvals the PDUFA date holds. An alternative to the 10 month timeframe exists if the drug in question has priority review. This allows for a 6 month timeframe from NDA acceptance to PDUFA.

An advisory panel date is also often released alongside the PDUFA date. This is a date set aside for an FDA advisory panel to research and report their opinion on whether or not a drug is suitable for approval. The panel size varies, but is generally somewhere in the region of 15 individuals, each of which votes yes, no or abstains. The FDA doesn’t always follow the advice of its advisory panel, but oftentimes it does, meaning the advisory panel vote can be a great indication of whether or not a drug will get the go ahead for commercialization from the FDA.

So why is this important? Well, it offers us 3 very important catalysts ahead of which you can gain exposure to positive news. The NDA acceptance will often serve up some short term upside momentum, as it marks the point at which the clinical development process is complete. The advisory panel decision gives us insight into the final FDA decision, and so a positive nod from advisory can generate some upside volatility. The PDUFA date is important for more obvious reasons.

So there we go – that’s what happens after trials complete. Carry this into your biotech operations going forward to add to your chances of success in this great space!