Health care stocks are among a handful of sectors bucking the broader market downturn in 2018. Biotechs, though down for the year, have suffered less damage than other stocks.

One factor that worked in favor of the biotech space: a record number of new molecular entity approvals in 2018.

Accent On Innovation

NMEsare products containing active moieties that have not been previously approved by the FDA, either as a single ingredient drug or combo product according to the FDA.

The number of NMEs approved so far this year is 56. This compares to 46 in 2017, 22 in 2016 and 45 in 2015.

What makes the 2018 numbers more noteworthy is that 56 percent of the NME approvals were related to rare diseases, Cantor Fitzgerald analyst Elemer Piros said in a Monday note, citing a FDA report.

The FDA defines rare diseases and disorders as those that affect fewer than 200,000 people in the U.S., or those which affect more than 200,000 people but have drugs in development that are not expected to recover their development and marketing costs.

Orphan drug designation is accorded to drugs that are being developed to treat a rare disease.

Why The Surge?

Orphan drug approvals hit a record in 2018, partly due to FDA's Orphan Drug Modernization Plan, or ODMP, which was unveiled in 2017, Piros said. This plan eliminated the existing orphan designation backlog, he said. 

The orphan drug designation incentivizes rare disease drugs, and — along with other designations such as priority review — leads to frequent meetings with the FDA, expediting the regulatory review timeline.

"We believe that this increased approval rate for rare/orphan diseases reflects at least an inexplicit strategy by FDA to consider risk/benefit and emphasize more efficient drug development through the identification of the right patients, for the right drug, at the right time," Piros said.

See Also: The Week Ahead In Biotech: Conferences, PDUFA Dates And Clinical Trials

Noteworthy Approvals 

Cantor listed some of the NME approvals for companies in its coverage universe:

First Approvals

Piros also noted several first approvals:

Promising Outlook 

All NME approvals of the year met the PDFUA goal dates, according to Cantor Fitzgerald. The firm expects the trends could continue in 2019 and beyond.

"From the Cantor universe, we could potentially expect an increased number of FDA decisions this year (from the 21 last year)," Piros said.