Getting the Market Right: Marc Lichtenfeld Explains PDUFA Dates

Steve McDonald
by Steve McDonald

Transcript:

Steve McDonald: Our guest this week is Marc Lichtenfeld, the biotech and pharma strategist for The Oxford Club. He’s here to talk about something that I think sounds like something that hides under your bed when you’re a child: a PDUFA.

Marc Lichtenfeld: Well, it does sound like a monster for some of the biotech executives.

SM: If you don’t eat your vegetables, the PDUFA will get you.

ML: Yeah, and you can see why it would be so scary for some pharma and biotech CEOs.

SM: Well the whole industry is scary as far as I’m concerned...

ML: Well, PDUFA stands for the Prescription Drug User Fee Act. And this is a law that was instituted in the early ‘90s that basically makes it so that the drug companies - the pharma and biotech companies - pay the FDA for it to review their drugs and decide on approval or rejection.

And this is important because there’s something called the PDUFA date. So when a company applies to get a drug approved, it is given a PDUFA date by the FDA, which is the date that it’ll either get the “yes” or “no” - approval or rejection of its drug.

So you’ll often see a company release that its PDUFA date is November 3, and you know that by that date, the FDA is going to rule. So if you’re the CEO of a biotech or pharma company, you’re sitting there at your computer waiting for that email to come in from the FDA saying “yes” or “no.”

SM: Now, is this after all the clinical trials?

ML: Right, yeah. So the company conducts all the clinical trials. Then it submits its application to the FDA with all the supporting data, and the FDA gives it the PDUFA date, at which point it will get that decision.

And it could come early.

SM: See, I thought the FDA monitored the clinical trials as they were going on.

ML: It does, and if something is going wrong, it’ll put a stop to it. Sometimes if things are going exceedingly well, it’ll actually -

SM: Fast-track it.

ML: Fast-track it. Or it could even stop a trial early to accelerate the application for approval.

But for most drugs that make it all the way through Phase 3 trials, the company will submit the application to the FDA - and sometimes it’ll do it even if the results weren’t great. It’ll just throw it at the wall and see if anything sticks, and the FDA will then make that ruling on or before the PDUFA date.

SM: Now, is the PDUFA date published? Can our Members see it somewhere so that they can say, “Well, on this date we’ll have a decision. I might buy it that day.”

ML: Yeah, the companies will usually release that date as well. On the FDA’s website you can find it. You’ll probably have to do a little bit of searching for it. But it is public information. Once the company has that date, it’ll usually release it and let everybody know that this is the date it’s expecting the FDA decision.

SM: Is this going to help anyone in making money on these stocks?

ML: It does. I mean, I don’t think you necessarily want to wait for that date to buy. Because very often - especially if it’s a small company - the stock is going to swing in a big way on approval or rejection... especially if the company doesn’t have a lot of drugs.

You know, if it’s a Bristol-Myers Squibb (NYSE: BMY) or a Pfizer (NYSE: PFE), it might not move the needle that much. If it’s a smaller biotech, it certainly could.

SM: Yeah, these small biotechs run 20%, 40%, 50%.

ML: Absolutely.

SM: It’s ridiculous.

ML: But you’d certainly want to be aware of when that date is. Because if you’re not prepared for that volatility - if that’s not something you are looking to participate in... If you’re just, let’s say, a trader trying to get in and out of these stocks, you certainly want to be aware that you have this major, major catalyst coming up.

And on the flip side, if you believe strongly in the drug, and you want to invest in the company because you think it’s going to be approved, and you want to participate in that upside, you also obviously want to know when that decision is coming.

SM: Is the PDUFA listed on... for example, investors’ news releases? Where would they find it on the website?

ML: Yeah, so they would find it... usually in a press release - sometimes in a transcript for an earnings call. In an earnings release, it’ll have all the financials and then it’ll say, “Looking forward to 2018. Our PDUFA date is February 3 for this particular drug.”

So you can usually find it in a press release, in a company’s presentation, on its website or, worst-case scenario, on a transcript.

SM: Is there a central location anywhere where all of them are listed? Sounds like something that would be very useful.

ML: Yeah... again, if you go to FDA.gov, it’s a little difficult to find.

SM: Everything on government websites is hard to find, not just the FDA’s.

ML: There is a free site that I’ve found that’s called biopharmcatalyst.com, and they’ll have PDUFA dates... and a lot of other things too. So you’ll have to kind of weed out some of the other things. But they have free listings of a lot of the big catalysts coming up for these companies.

SM: The PDUFA date. That’s fantastic. It sounds like something - if you’re into the biopharma industries, it’s something you would absolutely have to follow, isn’t it?

ML: Yeah, you must know these dates, especially in some of these smaller companies.

SM: And that’s it. Thank you so much again for coming in.

ML: My pleasure, thanks for having me.

Thoughts on this article? Leave a comment below.

Watch the PDUFA Date on This Cutting-Edge Cancer Fighter

As Marc and Steve discussed, smaller biotechs may swing wildly on or before the PDUFA date for one of their products. Thus, buying before the PDUFA date is often the way to lock in the biggest possible profits.

Subscribers to Marc’s Lightning Trend Trader service know this. It’s why Marc generally recommends small biotech companies when their drugs are still in late-stage clinical trials.

One of Marc’s latest and most exciting recommendations is GlycoMimetics (Nasdaq: GLYC), a cancer and sickle cell drug company with some great Phase 2 results. Here’s Marc introducing the pick earlier this week...

In between eating way too much and entertaining out-of-town guests, I completed my research and wrote up today’s recommendation.

It’s a company I’m excited about because it has three drugs - two for cancer and one for sickle cell disease. It also has a very important catalyst coming up in two weeks.

GlycoMimetics (Nasdaq: GLYC) focuses on carbohydrates and their role in biology. Carbohydrates can affect the function of important proteins.

The company has three drugs in clinical trials. Its lead candidate is rivipansel for sickle cell disease. It is partnered with Pfizer (NYSE: PFE).

Rivipansel is currently in Phase 3 trials to treat vaso-occlusive crisis in sickle cell patients. Vaso-occlusive crisis occurs when sickle-shaped diseased cells obstruct the blood vessels, causing severe pain.

There are currently 100,000 hospitalizations every year in the U.S. caused by vaso-occlusive crisis. It is a wide-open market, as there are no approved drugs. The current standard of care is narcotics, which come with a wide range of problems.

In the earlier Phase 2 study, patients who took the drug spent an average of 84 fewer hours in the hospital than patients who received the standard of care. That makes the economics of the drug very favorable to insurers.

Just as importantly, in the study, which was double-blind and placebo controlled (patients and doctors didn’t know which patients received the drug and which received the placebo), patients were able to control the amount of narcotics that they received. Patients who received rivipansel used 83% less narcotics than those who received the placebo.

The company expects to be able to release some information on the Phase 3 trial in the first quarter of next year.

GlycoMimetics receives milestone payments from Pfizer when certain goals are hit and will be paid double-digit royalties on any sales once the drug is approved.

Its cancer drug GMI-1271 is just as exciting. The drug is currently in Phase 2 trials for acute myeloid leukemia (AML) and just began a Phase 1 trial in multiple myeloma.

GMI-1271 doesn’t kill cancer. Rather, it disrupts a tumor’s resistance to chemo, making the chemo more effective.

In an earlier trial, 41% of patients went into complete remission versus 28% who received chemo only, without GMI-1271.

In patients with newly diagnosed AML, 68% went into remission versus 44% for the control group.

Perhaps just as importantly, side effects from the chemo were reduced. A quarter of patients treated with the standard of care for AML experienced grade 3 or 4 mucositis, painful inflammation and ulceration of the mucous membranes that line the digestive tract, making it impossible to eat. Those patients must be fed intravenously.

When patients were given GMI-1271, only 4% experienced grade 3 or 4 mucositis.

- Samuel Taube with Marc Lichtenfeld

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