FDA Watch: February's Notable PDUFA Dates

"Higher the risk, higher are the returns" is a dictum traders are well aware of. This rings in very true, especially in the case of biotech stocks, as investment in them can really make or break an investor.

Most biotech stocks are one-trick ponies, deriving bulk of their revenues from a single product or hinging their future success on one product-candidate they are developing. The case in point is CoLucid Pharmaceuticals Inc CLCD, which is engaged in developing a small molecule called lasmiditan for the treatment of migraine headaches. When this product candidate faces a setback, it could be all but end of the company's existence of the company. This exemplifies the risks of investing in the space.

Leaving The Woes Of 2016 Behind

The year 2016 wasn't exactly kind for the biotech space, as it suffered the onslaught of political opposition to price gouging in the industry. That coming in an election year was too much for the sector to handle.

The New Year has dawned well for biotech stocks and has infused new energy into the space, with the major sector indexes and ETFs moving back to black after last year's drubbing. Since the beginning of 2017, the NYSE ARCA BIOTECH INDEX has gained 7.4 percent. In the same period, the iShares NASDAQ Biotechnology Index (ETF) IBB has gained 6.7 percent and the SPDR S&P Biotech (ETF) XBI has advanced 11.5 percent.

PDUFA Date

As things are looking up, it pays for investors to keep a tab on key dates that matter for the stocks in the space. Apart from the announcement of the results of the clinical trials, PDUFA date is also a key event/catalyst for a biotech stocks.

PDUFA, an acronym for Prescription Drug User Fee Act, is an Act that was legislated in 1992 to expedite the marketing of the drugs being developed. Under the Act, the FDA is allowed to collect fees from drug makers to fund the approval process. Once a NDA, or New Drug Application, is filed with the FDA, it has about a 10 month-timeframe to review the application. According priority review status to a drug will shorten the review period from 10 months to six months.

The PDUFA date, therefore, is the date set for the FDA to give its verdict on the drug.

As we are into the first full week of February, let us look at some key PDUFA dates investors may do well to keep an eye on.

1. Second Time's A Charm For Amgen?

Amgen, Inc. AMGN is awaiting the PDUFA date for Parsabiv, a potential treatment for secondary hyperparathyroidism in adult patients with chronic kidney disease on hemodialysis. After filing the NDA in November 2015 and being assigned a PDUFA target action date of August 24, 2016, Amgen faced disappointment, as the FDA issued a complete response letter. The company resubmitted the application and a decision on it is expected by February 9.

2. Valeant's Biologic To Treat Psoriasis At FDA Altar After Strong FDA Panel Backing

Valeant Pharmaceuticals Intl Inc VRX's Brodalumab is up at the FDA altar and is seeking the regulatory agency's blessings. Th D-day has been set for February 16.

Brodalumab is a human monoclonal antibody meant to treat adults with chronic, moderate to severe plaque psoriasis. Valeant bought Brodalumab from AstraZeneca plc (ADR) AZN for a throw-away price of $100 million in upfront payment, $170 million in pre-launch milestones and $175 million in sales bonuses. AstraZeneca had co-developed it along with Amgen, before Amgen threw in the towel on it.

A FDA panel gave its backing to the biologic in July 2016, voting 18–0 to approve it. However, panelists recommended that the label carries strong warning about the potential for suicide and self-injurious behavior. Even if the FDA gives its nod, Valeant might have to contend with a host of others having a competing product.

3. Amphastar Awaiting The Star Turn With Intranasal Version of Opioid Addiction Treatment

Amphastar Pharmaceuticals Inc AMPH, which filed a NDA for its less invasive Naloxone intranasal for treating opioid addiction has been assigned a PDUFA date of February 19. The company's injectable version of the drug fetched sales of $39 million in 2015.

4. Celgene Seeking Label Extension For Flagship Product

Celgene Corporation CELG is awaiting approval for its Revlimid, as a maintenance therapy for adult patients with newly diagnosed multiple myeloma who underwent autologous stem transplant. Revlimid is Celgene's key drug to treat blood cancer and the company is now seeking a label extension.

The therapy recently received a European Medicines Agency committee nod. The agency is set to give its verdict in about two months.

The FDA, meanwhile, has set a PDUFA date of February 24.

5. Lexicon Waits With Bated Breath After Initial Delay

Lexicon Pharmaceuticals, Inc. LXRX also has a key catalyst this month, as the FDA is set to announce its verdict on the company's Telotristat etiprate for the treatment of carcinoid syndrome on February 28. The treatment was accorded priority review status. The FDA was originally expected to rule by November 30, 2016, but the agency sought an extension, citing the additional time it required to review the clinical trial data analyses submitted to it. This moved the PDUFA date to the last day of February this year.