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There was a notable dip in FDA novel drug approvals in 2016 with the agency giving its nod to 22 treatments during the year. Compare this to 45 approvals in 2015 and 41 in 2014 and the 2016 numbers look really disappointing.
It’s not like a fewer number of applications were submitted in 2016 -- as of Dec 9, 2016, 36 new molecular entity (NME) applications were submitted, in line with the average NME filings of 35 over the past decade.
Source: FDA
So what is the reason behind fewer drug approvals last year?
Timing Matters
According to the FDA's Center for Drug Evaluation and Research (CDER), 5 NMEs that had due dates in 2016 were approved in 2015 thereby boosting the number of approvals in 2015. Although a few drugs like Clovis Oncology, Inc.’s Rubraca (specific type of ovarian cancer) and Pfizer Inc.’s (PFE - Free Report) Eucrisa (eczema) with 2017 PDUFA dates gained earlier-than-expected approval in 2016, these were not enough to boost the total tally to 2015 levels.
Moreover, the PDUFA dates for drugs like Lexicon’s telotristat etiprate (carcinoid syndrome) and Roche’s (RHHBY - Free Report) Ocrevus (multiple sclerosis) were pushed out to 2017.
Higher Number of Complete Response Letters (CRLs) in 2016
But timing was not the only reason for the fewer number of approvals. A key reason was a higher number of CRLs being issued by the FDA this year -- a CRL is issued by the agency to inform the company that its application will not be approved in its present form. There could be several reasons for the same including insufficient data to support approval as well as manufacturing issues.
Some of the drugs that got CRLs in 2016 include Spectrum Pharma’s Qapzola (immediate intravesical instillation post-transurethral resection of bladder tumors in patients with non-muscle invasive bladder cancer), Dynavax’s experimental hepatitis B vaccine Heplisav-B, Advanced Accelerator’s Lutathera (treatment of gastroenteropancreatic neuroendocrine tumors in adults), Sanofi (SNY - Free Report) and Regeneron Pharmaceuticals, Inc.’s (REGN - Free Report) sarilumab (rheumatoid arthritis), and AstraZeneca plc’s (AZN - Free Report) ZS-9 (hyperkalemia).
Complete Response Letters Issued
Source: FDA
What’s in Store for 2017?
With the passing of the 21st Century Cures Act, expectations are that there will be more innovation in the sector and, maybe, a surge in new drug approvals. Some of the key drugs currently under FDA review with decisions expected in the next few months include Sanofi/Regeneron’s dupilumab (atopic dermatitis), AstraZeneca’s ZS-9, ARIAD Pharmaceuticals, Inc.’s brigatinib (cancer), Tesaro’s niraparib (cancer), Synergy’s plecanatide (chronic idiopathic constipation) and Lilly/Incyte’s investigational rheumatoid arthritis treatment, baricitinib. Apart from Sanofi, all these companies are Zacks Rank #3 (Hold) stocks -- you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The FDA Approved Fewer Drugs in 2016: Here's Why
There was a notable dip in FDA novel drug approvals in 2016 with the agency giving its nod to 22 treatments during the year. Compare this to 45 approvals in 2015 and 41 in 2014 and the 2016 numbers look really disappointing.
It’s not like a fewer number of applications were submitted in 2016 -- as of Dec 9, 2016, 36 new molecular entity (NME) applications were submitted, in line with the average NME filings of 35 over the past decade.
Source: FDA
So what is the reason behind fewer drug approvals last year?
Timing Matters
According to the FDA's Center for Drug Evaluation and Research (CDER), 5 NMEs that had due dates in 2016 were approved in 2015 thereby boosting the number of approvals in 2015. Although a few drugs like Clovis Oncology, Inc.’s Rubraca (specific type of ovarian cancer) and Pfizer Inc.’s (PFE - Free Report) Eucrisa (eczema) with 2017 PDUFA dates gained earlier-than-expected approval in 2016, these were not enough to boost the total tally to 2015 levels.
Moreover, the PDUFA dates for drugs like Lexicon’s telotristat etiprate (carcinoid syndrome) and Roche’s (RHHBY - Free Report) Ocrevus (multiple sclerosis) were pushed out to 2017.
Higher Number of Complete Response Letters (CRLs) in 2016
But timing was not the only reason for the fewer number of approvals. A key reason was a higher number of CRLs being issued by the FDA this year -- a CRL is issued by the agency to inform the company that its application will not be approved in its present form. There could be several reasons for the same including insufficient data to support approval as well as manufacturing issues.
Some of the drugs that got CRLs in 2016 include Spectrum Pharma’s Qapzola (immediate intravesical instillation post-transurethral resection of bladder tumors in patients with non-muscle invasive bladder cancer), Dynavax’s experimental hepatitis B vaccine Heplisav-B, Advanced Accelerator’s Lutathera (treatment of gastroenteropancreatic neuroendocrine tumors in adults), Sanofi (SNY - Free Report) and Regeneron Pharmaceuticals, Inc.’s (REGN - Free Report) sarilumab (rheumatoid arthritis), and AstraZeneca plc’s (AZN - Free Report) ZS-9 (hyperkalemia).
Complete Response Letters Issued
Source: FDA
What’s in Store for 2017?
With the passing of the 21st Century Cures Act, expectations are that there will be more innovation in the sector and, maybe, a surge in new drug approvals. Some of the key drugs currently under FDA review with decisions expected in the next few months include Sanofi/Regeneron’s dupilumab (atopic dermatitis), AstraZeneca’s ZS-9, ARIAD Pharmaceuticals, Inc.’s brigatinib (cancer), Tesaro’s niraparib (cancer), Synergy’s plecanatide (chronic idiopathic constipation) and Lilly/Incyte’s investigational rheumatoid arthritis treatment, baricitinib. Apart from Sanofi, all these companies are Zacks Rank #3 (Hold) stocks -- you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>